Due to their ability to combine the advantages of a corporation and a partnership, Limited Liability Companies (LLCs) are a common choice for business arrangements. LLCs give owners (members) personal liability protection as well as flexible administration and tax advantages. The question of whether one LLC can be used for many firms, however, may arise for certain business owners.
The quick answer is that a single LLC can house several enterprises. This is referred to as a “series LLC” and is permitted in some states. The creation of distinct “series” with their own assets, liabilities, and members is possible with a series LLC, which is a type of limited liability company. Although they are treated separately for legal and tax considerations, these series are still considered a part of the primary LLC.
It’s crucial to remember that not all states permit series LLCs. Only 17 states—Alabama, Delaware, Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Montana, Nevada, North Dakota, Oklahoma, Puerto Rico, Tennessee, Texas, Utah, and Wisconsin—as well as the District of Columbia recognize series LLCs as of 2021. Before choosing to employ a series LLC for their various operations, business owners should familiarize themselves with the rules and laws applicable in their state.
Do DBAs require their own bank accounts?
A business may employ a fictional name in place of its legal name called a “Doing Business As” (DBA). It’s not necessary for a company using a DBA to maintain a separate bank account. To simplify accounting and tax reporting, it is advised to maintain separate records for each DBA.
Employer Identification Numbers (EINs) are special identification numbers that the IRS issues to firms for tax-related reasons. The legal name and organizational structure of the business must coincide with the details on file with the state where it is registered when the business registers for an EIN. A company should notify the IRS of any changes to its legal name or organizational structure by updating its EIN.
The answer is yes, but unlike a series LLC, a sole proprietor’s subsidiaries are not independent legal entities. It would be necessary to register each subsidiary as a distinct legal entity, such as an LLC or corporation.
Although it is not necessary for a lone entrepreneur to have a separate business bank account, it is advised for accounting and tax reasons. It is simpler to keep track of income and expenses and to complete tax returns when personal and corporate funds are kept apart.
In conclusion, a series LLC can be used to conduct many businesses under a single LLC, but it’s crucial to investigate state laws and regulations first. A separate bank account is not necessary for DBAs, and the EIN should be the same as the company’s legal name and organizational structure. Subsidiaries are permitted for sole proprietors, but each one needs to be registered separately. Finally, while having a separate business bank account is not needed for sole entrepreneurs, it is advised for better financial management.