Expanding Beyond the Plate: Navigating New Ventures with Your LLC

In the ever-evolving landscape of entrepreneurship, the desire to diversify and explore new business ventures is not uncommon. As the owner of a successful LLC for your personal chef business, the prospect of venturing outside the culinary world presents exciting opportunities. However, the question arises: Should you start another LLC or file a Doing Business As (DBA) with a more suitable name? This article delves into the considerations to help you make an informed decision about the best path forward for expanding your business horizons.

The Power of Your Existing LLC

Starting a business from scratch requires a significant investment of time, effort, and resources. Your current LLC has already established a foundation of credibility, legal structure, and administrative processes. Leveraging your existing LLC for new ventures can provide several advantages:

  1. Cost Efficiency: Creating a new LLC involves expenses like registration fees, legal fees, and other setup costs. Utilizing your current LLC can save you money by eliminating redundant expenses.
  2. Time Savings: Establishing a new legal entity requires time for paperwork, registrations, and legal processes. Using your existing LLC can expedite the process, allowing you to focus on the core aspects of your new business venture.
  3. Consolidated Branding: If your new venture is closely related to your personal chef business or shares common values, using the same LLC could help maintain a consolidated brand image, fostering customer trust and recognition.

Filing a DBA for Branding Flexibility

On the other hand, opting for a DBA under your existing LLC might be a suitable choice if your new venture is significantly distinct from your culinary business:

  1. Distinct Branding: If your new venture falls into an entirely different industry and requires a distinct brand identity, filing a DBA allows you to operate under a different name while keeping the legal structure intact.
  2. Limited Liability Protection: If your new venture carries higher risks, having separate DBAs can help isolate liabilities associated with each business, safeguarding your personal assets.
  3. Market Perception: If the industries are vastly different, operating under the same LLC might confuse potential clients and stakeholders. A DBA can help you tailor your business image to suit each venture.

Factors Influencing Your Decision

When deciding whether to establish a new LLC or file a DBA for your new business ventures, consider the following factors:

  1. Nature of Ventures: Assess how closely related your new ventures are to your existing culinary business. The more overlap there is in terms of products, services, and target audience, the more sense it makes to use the same LLC.
  2. Liability Concerns: If your new ventures involve higher liability risks, such as manufacturing or construction, it might be wise to create separate legal entities to protect your existing assets.
  3. Administrative Burden: Starting a new LLC comes with additional administrative responsibilities. If you’re looking for a simpler approach, using a DBA could be more manageable.
  4. Branding Strategy: Consider whether your branding strategy requires distinct names and identities for your different ventures or if you can maintain a consistent brand under a single LLC.

Conclusion

Expanding beyond your personal chef business is an exciting endeavor, and the decision to establish a new LLC or file a DBA will depend on the unique circumstances of your new ventures. Leveraging your existing LLC can save you time and money while maintaining brand consistency. However, if your new ventures are significantly different and require distinct branding and liability protection, opting for a DBA might be a better choice. Consulting with legal and financial professionals can provide valuable insights tailored to your specific situation, helping you navigate this important decision and set a solid foundation for your new business ventures.

Video Transcript

I have an LLC for my personal chef business, but I want to start a company where I do business ventures outside of culinary and food. Would it be better to start another LLC? Or should I file a DBA with a more suitable name?

All right, so we have a chef business, and the owner wants to start another business, perhaps multiple other businesses. The big question is whether to have multiple LLCs or not. Are you concerned about limited liability?

So if you are concerned that the businesses would have shared risk and liability, and you could lose one business and its assets from a lawsuit in another business, then that is the reason to have two separate entities. But most small businesses don’t have a lot of value in the business. You know, you don’t have hundreds of thousands of dollars in equipment. You might have $5,000 in chef supplies because you have a chef culinary business. Well, the tools, equipment, and the inventory that you may carry as a chef are pretty insignificant compared to the size of a lawsuit. So I wouldn’t be as concerned about a lawsuit in your new businesses affecting the chef business.

I would focus on getting a really good insurance policy that covers the risks of all the businesses, having a single entity so that you keep things simple, and you are spending as little time as possible with the administrative burden of multiple LLCs. And then get a DBA as needed for public relations purposes.

DBAs are only for public relations; they are not for business purposes. So if you have a chef business and, let’s say, a clown business, where you are a clown and you go to parties, go ahead and get a DBA for the clowning business. I would keep it simple in a single LLC, mitigate risk with insurance, and then wait to have multiple LLCs until you have either a lot of revenue coming in from both businesses or a number of employees in each business, or significant assets like over $100,000 in assets like real estate or something like that. When you get to that size, significant employees, revenue, or assets, that is when it can make sense to hire the professionals to have those separate LLCs. But otherwise, I would say keep it simple and get insurance to mitigate any risk of getting sued.

Conclusion

All right, I’m Aaron Hall. I am an attorney for business owners and entrepreneurs.

I do this educational channel to help you spot issues to discuss with your attorney, to help you identify ways to avoid problems. But keep in mind, it is an educational channel. This is not a replacement for using an attorney who understands the law in your state, and in your jurisdiction, and can take the time to understand your particular goals and concerns, and exceptions that might apply to you.

I would love for you to get the exclusive free resource that we make available to subscribers. It is a list of common legal problems and how to avoid them. And then videos. Educational videos talking about how to avoid those problems in your company and set your company up for success. You can get that at aaronhall.com/free, enter your email address, and we will start sending you that information by email. If you have other questions, feel free to continue to add them here. I will use those questions to answer in a future live Q&A. It was great being with you today. I look forward to seeing you again at the next live session.