Parent Company LLC

[tksheehan]

I recently purchased a small lure manufacturing company that targets the same customer base as my current company. As I plan to maintain both brands/companies separately, I've decide to create a Parent company (LLC) as the reporting entity. The company I recently purchased is a sole proprietorship and I was wondering if it would now be protected under the Parent LLC or would I need to convert it to an LLC to gain the protection?

[Evan]

You're inquiry is more of a legal one than tax. I'll push this over to the appropriate forum.

That said, with all of this "purchasing" going on, what does the paperwork say? "Who" bought the business?

[tksheehan]

I personally bought the business.

[Online CPA]

Did you get any response or help regarding this?

Any sole proprietorship subsidiary has to pay taxes before passing profits on to the parent company. I would just list the new business activity under the current LLC as a DBA (doing business as) to keep it separate but keep the same benefits of the current LLC. Making it two divisions of the same LLC would be my choice, but if not, then yes, you should create another LLC.