Multiple Businesses Under One LLC: DBA’s explained

 

Written by Peter Keszegh

So you're an entrepreneur with several irons in the fire? It sounds like you have that undeniable hustle to create and grow businesses! That's fantastic. But navigating the legal and administrative maze of operating multiple ventures can be confusing. Don't worry – it doesn't have to be.

If you already have one LLC, there's a clever way to manage additional businesses without the hassle of forming a whole new company for each one: DBAs. Let's unravel what these DBAs are all about and uncover the pros and cons of relying on them.

What's a DBA?

DBA stands for "Doing Business As." Think of it as the business world's version of a stage name. Your LLC already has a formal, legal name – the equivalent of its birth certificate. Let's say your LLC is officially named "Sunshine Enterprises LLC." It's solid, but maybe not the most exciting for marketing a bakery or pet grooming business.

That's where the DBA comes in! You can file DBAs (also called trade names or fictitious names), like "Sunshine Sweets" for the bakery and "Paws & Claws" for the grooming salon. These are the names you'll use to interact with customers, put on signage, and use for advertising. 

The DBA gives your business a personality without having to create entirely separate legal entities. Here's the key point: customers see your catchy DBA names, but on the official paperwork, your main LLC is still doing the heavy lifting. See how simple and flexible that is?

can an llc have multiple DBA's? Here's what you need to know

Can an LLC have multiple DBAs?

Absolutely! In most states, there's no limit to the number of DBAs you can register under a single LLC. This is where the DBA strategy really shines. Imagine your brain is constantly buzzing with new business ideas – with DBAs, there's no need to file for a whole new LLC every time inspiration strikes. Let's illustrate this:

  • Year One: You launch "Sunshine Sweets" (DBA) under your LLC

  • Year Two: Feeling the pet-care love, you add "Paws & Claws" (another DBA)

  • Year Three: Your inner interior designer awakens, so you file for "Sunshine Spaces" (yet another DBA)

See the pattern? One LLC, multiple business personalities! This flexibility is a major draw for entrepreneurs. You'll save time and money compared to repeatedly forming and registering brand-new LLCs for each new venture.

The advantages of operating multiple businesses under one LLC

The LLC + DBA combination is a favorite among savvy entrepreneurs for good reason. Here's a breakdown of the key benefits it offers:

Cost savings: the bottom line boost 

Each LLC you form comes with setup fees, ongoing state filing fees, and potential costs for maintaining a registered agent. With multiple DBAs, you sidestep those recurring costs for each individual business. Those savings add up quickly, especially when you're bootstrapping your ventures.

Administrative ease: cut through the red tape 

Imagine having just one set of annual reports to file, one tax return to prepare (although you'll still need organized bookkeeping!), and one registered agent to deal with for all your businesses. 

DBAs streamline the administrative side, freeing up precious time and mental energy you can instead put into building your businesses.

Branding flexibility: experiment and discover 

Not sure if "Sunshine Suds" or "Sunshine Soapworks" is the better name for your new artisan soap line? DBAs let you try out different names on your target market with minimal hassle. 

Get that real-world feedback, then confidently choose the DBA (and brand) that truly resonates with customers.

Here are some challenges you need to be aware of

Challenges: things to consider before relying on DBAs

While incredibly convenient, DBAs aren't a magic solution for every entrepreneur. It's crucial to be aware of these potential downsides. The most significant factor to consider is liability. A DBA doesn't create any legal separation between your businesses. 

If your bakery faces a lawsuit, for example, creditors could potentially go after the assets of your pet grooming business or any other ventures running under your LLC. This lack of "shielding" can lead to significant financial risks.

Furthermore, while technically possible to manage everything under one business bank account, it can quickly become a tangled mess. Keeping separate bank accounts and meticulous financial records for each DBA business, even if they all fall under the same LLC, is highly recommended. 

Otherwise, come tax time or if you need to show clear financials to investors, you could be in for a major headache.

Lastly, if you're aiming to build wholly independent brands with zero visible connection, DBAs might not be ideal. Savvy customers could spot that your businesses share the same underlying LLC, potentially diluting the unique brand identities you're trying to cultivate. 

It's wise to carefully weigh these challenges against the convenience of DBAs before making them your go-to strategy. If any of these points raise serious concerns for your specific situation, exploring alternative structures might be a better move.

When might creating independent LLCs be better?

While the LLC + DBA strategy offers simplicity, there are times when forming separate LLCs is the savvier choice. Consider these factors:

High-risk business: playing it safe 

If any of your ventures operate in a field known for frequent lawsuits or liability issues (think construction, certain types of manufacturing, or even medical services), the lack of protection with DBAs could be a major concern. A separate LLC offers a dedicated shield around that business, helping to safeguard your other assets should problems arise.

Big investments: protecting your hard work 

When you're pouring significant money, time, and resources into a specific business, it deserves its own layer of protection. If one of your other DBA ventures faces unexpected debts or legal issues, a separate LLC ensures your major investment remains secure.

Scaling and exit strategy: setting the stage for success 

Dreaming of rapidly scaling a specific business or perhaps even selling it in the future? Putting it under its own LLC from the get-go streamlines these processes. Investors and potential buyers often prefer the clear-cut structure and limited liability that a dedicated LLC provides.

DBA's explained: Alternatives

Alternatives to consider

While the DBA strategy is popular, it may not be the perfect fit for every situation. Here are a couple of alternative options worth exploring:

Series LLC: the hybrid option

Not every state allows this structure, but if yours does, it could be a smart alternative. With a Series LLC, you create separate "cells" within a master LLC. These cells have a bit more liability protection than simple DBAs, offering a balance between convenience and security. However, the availability and specific rules of Series LLCs vary by state

Holding company: building a corporate structure

This is a more complex approach typically used for larger or more established businesses. You create a parent LLC (the holding company) that owns multiple subsidiary LLCs or other businesses. This offers robust asset protection, but comes with increased paperwork, potential legal complexities, and higher costs.

Practical considerations if you choose multiple DBAs under one LLC

Let's say you've weighed the pros and cons, and DBAs seem like the right fit for your current business goals. Here are the crucial next steps to make this structure work effectively:

Filing DBAs

The process for filing a DBA varies slightly from state to state. Typically, it involves submitting a form (often called a Fictitious Business Name Statement or similar) to your Secretary of State's office or the equivalent county-level agency. Be prepared for a filing fee, which can range from around $25 to $100 depending on your location.

Operational best practices

While DBAs offer convenience, minimizing confusion in your day-to-day operations is essential. Remember, even though you're running everything under one LLC, you want to treat your different DBA businesses as separate entities as much as possible:

  • Separate Bank Accounts: Don't try to manage finances for all your ventures in one jumbled account. Open a dedicated business bank account for each of your DBAs to streamline income and expense tracking.

  • Independent Record Keeping: Avoid a bookkeeping nightmare! Maintain meticulous financial records for each business venture, including invoices, expense receipts, and profit/loss statements. This will save you major headaches come tax time.

  • Contracts: When signing any contracts, be crystal clear about which business (DBA) is the responsible party. Ensure the correct DBA name and your LLC's name (as the legal entity) are both included for maximum clarity.

Important Note: Taking these practical steps seriously will help mitigate the risks associated with the DBA structure and make managing multiple businesses less stressful.

real world examples of LLCs

A real-world example

Let's make this concept a bit more tangible. Imagine you have a knack for all things real estate and a strong entrepreneurial spirit. You start by forming an LLC and settle on a solid, no-frills name like "Acme Properties, LLC." Now, here's where the DBA magic comes in:

  • Acme Rentals: You see a need for quality rental management in your area. You file a DBA for "Acme Rentals," specializing in finding tenants, collecting rent, and handling maintenance for your own properties or those of other investors.

  • Acme Renovations: You've also got an eye for potential and some handy skills. You file another DBA, "Acme Renovations," focusing on transforming distressed properties into profitable flips or attractive rentals.

  • Acme Realty: As your business grows, you decide to become a licensed real estate agent to expand your services further. You file a DBA for "Acme Realty," allowing you to help clients buy and sell properties.

See how versatile this is? One LLC provided the foundation, and those DBAs let you branch into different but related aspects of real estate without the hassle and expense of creating a separate company for each focus area.

Should you seek professional advice?

Absolutely! While I've aimed to explain the concepts of DBAs and LLCs clearly, choosing the right business structure is a decision with serious legal and financial implications. It's always recommended to seek personalized advice from professionals like:

  • Attorneys: An attorney can explain the liability protection (and its limits) DBAs offer in your state. They can also advise on the best structure for your goals and risk tolerance, especially if you're considering alternatives like Series LLCs or a holding company.

  • Accountants or Tax Advisors: These professionals can shed light on the tax implications of using DBAs vs. separate LLCs within your specific circumstances. They can help you plan strategies to minimize tax burdens and ensure proper reporting.

Don't treat this decision lightly. Even a short consultation with an attorney or accountant can provide huge peace of mind and prevent costly mistakes down the line. Think of it as an investment in the future success of your businesses.

Frequently asked questions

Do I need a separate DBA for each business idea I have?

Not necessarily. DBAs offer flexibility. You might start with one DBA, and as your business grows or you diversify, consider adding additional DBAs under your existing LLC.

Can I use a DBA if I'm a sole proprietor?

Yes! Sole proprietors often use DBAs to operate under a business name that differs from their personal name. However, a DBA doesn't provide the liability protection of an LLC.

What if I want to do business in multiple states with my DBAs?

You'll likely need to register your DBA in each state where you do business. Some states have different names for the process, such as "foreign qualification."

How much does it cost to file a DBA?

Filing fees for DBAs vary by state but they typically range from around $25 to $100.

Can I trademark my DBA names?

Yes! While a DBA registration offers some name protection at the local level, trademarking your DBA at the federal level provides stronger, nationwide protection against others using confusingly similar names.

Wrapping up

There you have it! Using DBAs can be a smart and efficient way to run multiple businesses under one LLC umbrella. It's essential to be aware of both the benefits and the potential pitfalls before diving in. Remember, can an LLC have multiple DBAs? Definitely! But whether this is the right structure for your ventures depends on your individual goals and risk tolerance.

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