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Why you need separate LLCs for separate business ventures

When you establish your own business entity, you need to figure out how you plan to classify that business. The type of business structure you create will play a role in how you run it, pay taxes and so on. Similarly, if you have plans to open multiple businesses, you may wonder whether you should make each its own, separate business entity, or whether it may serve you better to create them under the same business umbrella.

You have a variety of options at your fingertips as far as how you can go about opening multiple business ventures. However, many people in your shoes find that creating separate limited liability companies for each business venture is their best option; here are some of the reasons why.

Arguments for forming separate LLCs for separate ventures

Currently, there are no restrictions in place governing how many separate LLCs you can form and operate at the same time, meaning you can, if desirable, create a separate LLC for each venture. The main benefit associated with doing things this way is that you keep your businesses separate from one another, which can protect your other entities if someone sues just one of them.

For example, say you own two separate food trucks and you established each as its own LLC. If someone becomes massively sick from eating at one of them and attempts to hold you liable, your other business will not be at risk. If, however, you choose to establish multiple businesses under the same umbrella and someone sues your company, all businesses established within it are potentially at risk of liability.

Compliance requirements

Establishing separate LLCs may take a bit more effort than creating all ventures under the same business structure, because you will have to pay maintenance fees and otherwise keep up with all compliance requirements. If doing so protects your other entities from liability, however, the extra effort may prove well worth it.

Ultimately, if protecting your businesses is in your best interests, creating separate LLCs may help you do so.

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  1. Charles W. Dobbins, Jr.

    Charles earned his J.D. degree from the University of Virginia in 1974

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