For example, suppose you started an LLC for your freelance web design services. If you later decided you also wanted to start a graphic design business creating logos, you could run that under the same LLC. Want to expand even further and offer social media support or brand management? You could also run these under the same LLC. As long as you have a single-member LLC (in other words, you don’t have any partners), you can expand indefinitely. If you have other partners, though, you’d typically have to get their approval. It depends on the structure you’ve laid out in your operating agreement.
For example, suppose you created an LLC called “Carolina Graphics, LLC” for your graphic design business. If you decided you also wanted to branch out into web design, you might decide to register “Carolina Web Design” as a DBA. The full, official title would be “Carolina Graphics, LLC, d/b/a Carolina Web Design. " Your DBA name wouldn’t have “LLC” after it, because you haven’t formed a separate LLC in that name.
For example, suppose you formed an LLC called “Sunshine Services, LLC” for bookkeeping services. If you decided you also wanted to offer tax preparation services, you could register “Sunshine Tax Prep” as a DBA. That would allow you to reach tax prep customers separately. If you’re using a name for your business that’s different from the name of your LLC, you do have to register that DBA with the state where the business is located—even if you haven’t set up a separate bank account. [6] X Research source
Before you file your DBA form, check your state’s business name database and make sure the name you want isn’t already in use. You can usually access the database through the website of your state’s secretary of state. If you’re setting up the DBA within your LLC, list your LLC on the registration form as the entity using the name. You might also need to provide a copy of your LLC’s organization documents.
For example, suppose you have an LLC to run a restaurant and then add a DBA under that LLC to manage a rental property. If a tenant sues over problems at the rental property, they could potentially come after the restaurant as well. On the other hand, if you’re running a web design business and add on graphic design and social media support, you might not be expanding your risk that much because all of those businesses are in the same sector.
Think of a DBA as a sort of nickname. No matter how many nicknames your LLC has, it’s still the same LLC and it’s still responsible for everything. In contrast, if you make every business a separate LLC, each one is insulated from the others’ risks. As an extreme example, if one of your LLCs went bankrupt, its creditors wouldn’t be able to come after the assets of the other LLCs because they’re separate entities.
With this structure, your main LLC typically doesn’t do any “business” of its own, apart from managing and organizing the other LLCs. This is why it’s known as a holding company—it merely holds the others. You might also hear it called an “umbrella company,” because all of the other businesses exist under the “umbrella” of the main LLC. An LLC can also be a partner in another LLC, although this gets a little more complicated. For example, if you and your brother wanted to open a restaurant and you already owned a restaurant through an LLC, you might make that LLC a partner with your brother in the other LLC that operates the new restaurant.
You’ll still need an EIN if your LLC has employees, even if it is treated as a disregarded entity for tax purposes. Any of your LLCs that you elect to have treated as a corporation for tax purposes must have their own EIN.
Real estate developers frequently use this model, creating an LLC for each property. That way, each property is shielded from responsibility for the debts or liabilities of any of the other properties. Talk to an accountant or attorney who specializes in business formation about your plans. They can look over your situation and advise you on what structure would best suit your needs and the needs of your businesses.
If each of your subsidiary LLCs is passing money to the holding company, that also allows you to more easily transfer money between your businesses if one of them runs into temporary cash flow problems.
Ultimately, this isn’t that much different from having several separate LLCs that simply operate independently of one another. You still have the same tax and legal requirements to keep up with. If your subsidiary LLCs are structured differently or there are other partners involved, you can run into pretty significant tax and legal complications.
