I am planning on operating 2 companies in the near future. Is it best to start 2 individual LLC's or Create 3 companies , (2 LLC's and 1 Parent/Umbrella company)
Thanks in advance for your help!
2 Answers from Attorneys
This is one of those simple questions but the answer has infinite complications. It all depends, on the type of businesses you are planning to operate, whether you will have any partners in those business, level of risk exposure for each business, projected revenue for each, any employees that would work for each business etc. And that's just the beginning.
Since you will likely be investing a lot of time and money in the businesses it would serve you best to get a consultation with a business attorney because the wrong corporate setup will be very costly to remedy retroactively and could result in higher taxes.
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Usually, I recommend that clients establish LLCs because it is a disregarded entity for federal tax purposes (or a partnership). This is a much more flexible option than a corporation. Also, since it is so quick to establish the LLC I would not establish them prior to actually need. The plan of having to LLCs for operating and a parent LLC is a good liability plan and also allows great flexibility.
Before you do anything, you need to talk to a good tax and business attorney to determine the type of entity, where the entity should be formed, and how the operating agreements will be set up to maximize tax and liability benefits.
I hope this helps you!
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