If you are an entrepreneur or a small business owner, you may be wondering if it is possible to use a single limited liability company (LLC) for multiple “doing business as” (DBA) names for multiple businesses. The answer is yes, it is possible, but there are some important things to consider before doing so.
First, let’s define what a DBA is. A DBA is a name under which a business operates that is different from its legal name. For example, if your LLC’s legal name is “ABC Enterprises LLC,” but you want to operate a clothing store called “Fashion House,” you can file a DBA for “Fashion House” and operate the clothing store under that name while keeping your LLC intact.
So, can you have multiple DBAs under one LLC for multiple businesses? Yes, you can. This is a common practice among entrepreneurs and small business owners who want to save money on registration fees and other legal expenses.
However, there are some potential drawbacks to using a single LLC for multiple DBAs. One of the biggest concerns is that if one of your businesses incurs a legal or financial liability, it could affect all of your other businesses. This is because all of your businesses are legally tied to the same LLC, which means that any lawsuits or debts could potentially affect all of your DBAs.
Another consideration is that using a single LLC for multiple DBAs can make it difficult to keep track of your finances. This is because all of your business income and expenses will be mixed together, making it harder to determine the profitability of each individual business.
If you do decide to use a single LLC for multiple DBAs, there are some important steps you need to take to protect yourself and your businesses. First, you should register each DBA with your state and obtain a separate tax ID number for each business. This will help you keep track of your finances and ensure that each business is operating legally.
You should also consider creating a separate bank account for each business to keep your finances separate. This will help you track your income and expenses for each individual business and make it easier to determine the profitability of each business.
Finally, it is important to have a solid operating agreement in place that clearly outlines the roles and responsibilities of each business and its owners. This will help protect you and your businesses from legal and financial liabilities and ensure that each business operates smoothly.
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In conclusion, it is possible to use a single LLC for multiple DBAs for multiple businesses, but it is important to consider the potential drawbacks and take the necessary steps to protect yourself and your businesses. If you are unsure about whether this is the right choice for your business, it is always a good idea to consult with a lawyer or accountant who can advise you on the best course of action.
In this video, you get answers to these questions:
- What Is a DBA?
- Should you have separate LLCs for each website?
Jeremy May asked the following question on YouTube. I was wondering, what if you have three different websites selling the same product but to three different niches? For example, they are each t-shirt websites, and they are selling to three different niches on those three different websites. Would you use a DBA, an LLC, or a different approach? Well, normally, business owners start out with one entity, so that would be one LLC. But if they want to use that same entity under a different name, they can set up a DBA.
What Is a DBA?
DBA stands for Doing Business As. It is just a nickname. It is kind of like if my name were Aaron, but I also went by Joe. I am the same guy. I just have two different names. So sometimes, there is confusion about DBAs. People think that a DBA might be a separate entity. It is not. A DBA is just a nickname. So the entity, the LLC, is going to have its own tax ID number. It is going to have its own financial information. It’s going to have its own bank account, and you can set up as many nicknames or DBAs as you want.
So starting out, business owners usually start with one LLC. Then, they look at perhaps adding a DBA. So, for example, let’s say you wanted to have a website under the first name, a website under the second name, and a website under the third name. Okay. So you have three different websites, and you want to use three different names, and you want, for example, the website at the very bottom to say, this site is owned by, and then whatever that name is. Well, you could use DBAs for each one of those, and they are all referencing the same LLC. So in order to do that, you just need to register a DBA in your state. DBAs go by different names, Assumed Name or Doing Business As. There are some different names. And I have another video that really goes into detail on that. But the bottom line is that DBAs are just nicknames, and you are welcome to have as many or as few as you want, but you are using them generally for marketing purposes, not for legal purposes, because it all goes back to the same LLC. So just like I might go by different nicknames with different people, you know, my daughters call me dad. My father might call me son. But I am still the same guy. I just have different names, so think of DBAs as nicknames, and that will help you out.
Should You Have Separate LLCs for Each Website?
The next question, then, is, should you have separate LLCs for each website? That really depends if you want to separate the liability from each one. That question goes beyond the scope of this video, but I have some other videos that discuss that, which I will link below. The bottom line, though, is usually, you don’t have multiple LLCs until you either have substantial revenue coming in from these different business endeavors or they have substantially different risk.
I am Aaron Hall. If you like comments or videos like this, feel free to subscribe and like this. If you have a question, you are welcome to put it in the comments, and I will do my best to use your question for a future video. And again, if you are looking as a business owner to avoid common legal problems, go get my free videos at aaronhall.com/free. You just enter your email address, and I will send you a PDF as well as you will start getting videos with exclusive educational information from me to business owners to help you avoid common problems in your company.