How broad can you make a business as an LLC to capture all of your side businesses?
I run a few different websites and I try to keep things consolidated under one business name/account with the Department of Revenue.
The real question is, can I make a "brand" that my websites, rental properties, and other investments sit under? Does that work legally and for tax purposes?
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Apr 6, 2015
I'm not an accountant or lawyer, but a multi-passionate entrepreneur with multiple businesses under one umbrella, as it appears you want to do. I have a Corporation and each of my businesses is a division of that parent company. It's kept separate in my bookkeeping by having a very detailed chart of accounts. However, currently my businesses are all online. Since you're dealing with rental properties, you should not only get accounting advice, but more importantly legal advice. Just because something can be legal for tax purposes, doesn't necessarily mean it's in your best interest from a legal liability standpoint.
Apr 1, 2015
You can, you have to legally file each as divisions under the parent company. LLC is cost effective for tax purposes. but should your company comes under fire in a legal matter, your personal assets are attacked as well. It will be better to have a Corp with different divisions under it.
Mar 31, 2015
Can you? Yes. But it does have consequences. Caveat--I am not a lawyer. What I am, however, is a multi-business owner that happens to be in nearly the same two verticals as you. This will be a long answer, but it is based on a decade of dealing with the exact situation you're describing, so I hope this helps.
To start, you should think about why people use LLCs. One of the biggest benefits of a Limited Liability Company is the Limited Liability portion. It's in the name, so it should be apparent, and yet I see many new business people gloss over this aspect. By setting yourself up under one or more LLCs, you protect yourself personally in the event anything ever goes wrong (lawsuit, bankruptcy, etc...). Hope for the best, plan for the worst.
An LLC is not 100% bulletproof, though, because if you pierce the corporate veil you lose the LLC's protection status. Long explanation here:
http://www.nolo.com/legal-encyclopedia/personal-liability-piercing-corporate-veil-33006.html
...but the short version is that if you commingle business and personal funds, you've pierced the corporate veil. Once you've pierced it, you lose all of the protection that an LLC affords, and if something goes wrong you are able to be held personally liable (i.e. someone takes you PERSONALLY to court, and takes whatever personal assets you have, not just the LLC's assets). This would be a huge mistake.
In your case, you are setting yourself up for failure. Should a real estate company get paid to build a new website or product? Should a marketing company hire an architect, pay for a rehab, or flip/rent a property? Probably not, and by engaging in both under the same LLC, you're just asking for someone to come after you personally.
But, what if it really did hold up in court, and you maintained the corporate veil? You still lose. Think about it--they might not be able to come after you personally, but all of your assets are in the same LLC. This means that a slip & fall on one of your properties just bankrupted your marketing business, because that renter took your umbrella LLC to court.
Outside of the potential tax/legal ramifications, I would wonder what business need you'd have for combining everything into one brand. If you're offering marketing services, I would think that you'd want to build a brand specifically tailored to that vertical. If you also need a brand for your real estate investments, you can think of a second brand, but this way you avoid confusing and potentially alienating your target customers ("so wait, do you invest in real estate, or do you do tech/marketing/etc..."). You might be a modern day renaissance man, but IMHO, specialists sell.
What I do is this: one LLC per activity. This way, all of my bookkeeping, etc...is in line, I maintain a distinct brand for each activity, and I can avoid piercing the corporate veil.
Good luck!
Best,
Hugh