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jasonhartman
04-18-2012, 02:29 PM
Hello all, I am new to this forum and needed some advice.
I am starting a freelance design business and my wife is beginning a textile design business. Neither of us have our businesses established as a DBA or LLC. We would like to have one company that would manage all of
the assets and money that comes in for the two businesses. How do we combine the two? Do we have to have each of the businesses registered as a DBA or LLC before. We would like the parent company to be a LLC to
cover both as far as liability. We also would like to retain the branding that each has.
Any help would be great. thanks.

Business Attorney
04-18-2012, 10:19 PM
The answer is "it depends." You can certainly operate more than one business out of the same LLC, but then the assets of each business are exposed to the liabilities of both businesses. In a freelance design business and a textile design business, you may not have major liability issues that you are concerned with. It's not like two businesses selling ladders and power mowers. You need to decide whether the risks are significant to merit creating separate LLCs. Likewise, you could even have a third LLC acting as a holding company for the other two LLCs. Again, you just need to weigh the costs.

If you use a single LLC but want to have businesses with two different names, at least one of them has to be operating under an assumed name. That generally requires a filing. In most cases I have seen, filing for an assumed name is cheaper than filing for another LLC. In addition, in most states the assumed name is only filed once or, if some renewal is required, it is only done every 5 or 10 years. Most states require annual filings and payments of fees for LLCs.

jasonhartman
04-18-2012, 10:44 PM
So I can have one LLC that holds liability over the freelance business, which I use my own name for, and the textile business, which I get a "Doing Business As" name registered for. I don't see alot of liability danger between the two to worry about getting separate LLC's for. Would this mean that I would only have to file taxes for the holding LLC or all businesses under that LLC also?
Thanks again for your help.

Business Attorney
04-19-2012, 12:35 AM
If the businesses are not set up as separate entities there is only one LLC and only one tax return. The fact that you give different parts of the LLC different names does not change that fact. Filing an assumed name registration (DBA) does not create another taxable entity.

Even if you set up separate LLCs but the only owner of those LLCs is the holding LLC, there is still only one tax return unless the wholly owned LLCs elect to be treated as a corporation. An LLC with a single owner (in this case, the holding LLC as the parent) is treated as a disregarded entity.

When I say that the LLC has a single tax return, I assume that you and your wife will be co-owners and are not in a community property state. If that assumption is correct, then the LLC will need to file a partnership return (Form 1065) unless it elects to be treated as a corporation (Form 1120) or an S corp (Form 1120-S).

If you and your wife live in a community property state and hold the interest in the LLC as community property, you may qualify to treat the entity as a disregarded entity and report all income and expenses of the businesses on Schedule C. There is a special rule for an LLC owned by a husband and wife (http://www.limitedliabilitycompanycenter.com/husband-wife-llc.html) as community property.