In the world of business, there is a common saying, “in diversity, there is strength.” This principle applies not only to the workforce but also to a strategic expansion around different products or services.
In the United States, this option is made possible through the use of a ‘Doing Business As’ (DBA) designation under a Limited Liability Company (LLC). But can you have multiple DBAs under one LLC?
The simple answer is yes. This article unfolds the scope, benefits, potential drawbacks, and procedural steps of registering multiple DBAs under one LLC.
Can You Have Multiple DBAs Under One LLC?
A ‘Doing Business As’ (DBA), also known as a trade, fictitious, or assumed name, allows a business to operate under a name different from its legal name.
An LLC or Limited Liability Company, on the other hand, is a type of business entity that combines the pass-through taxation of a partnership with the limited liability of a corporation.
It offers personal asset protection, which separates your business liabilities from your personal liabilities. By understanding these definitions, we can better grasp the concept of having multiple DBAs under a single LLC.
Can an LLC Have Multiple DBAs?
Yes, an LLC can have multiple DBAs. The number of DBAs owned by an LLC is not legally restricted. The goal is to allow the LLC to operate different businesses without creating separate legal entities for each one.
This approach is particularly beneficial for a broad range of strategies, especially when a company plans to offer diverse products or services, each requiring a unique identity.
Benefits of Having Multiple DBAs Under One LLC
Running multiple DBAs under one LLC comes with a number of advantages. First, it leads to significant savings. Establishing each new business as a separate LLC can lead to multiple state filing fees, annual report fees, and other charges.
With different DBAs under a single LLC, these repetitive costs can be avoided. Additionally, it reduces the amount of paperwork; creating a new LLC for every business unit requires additional paperwork and legal complexities.
Secondly, it allows for brand diversification. It gives you the flexibility to market each product or service under a different brand name, enabling you to cater to different market segments effectively.
Thirdly, there is the ease of doing business. Having multiple DBAs under one LLC makes it easier to manage various business aspects such as banking and taxation, as these will be tied to the single LLC, irrespective of its DBAs. This simplifies the management of these businesses, especially for small business owners.
Potential Drawbacks
While owning multiple DBAs under one LLC offer advantages, there are drawbacks to consider. One of the main concerns is the potential for confusion or dilution of a brand’s identity.
Each DBA represents a different face of your LLC and may require a unique marketing strategy. This could end up confusing customers or even diluting the original brand if not managed properly.
Additionally, it might lead to complexity in business operations and management. While under the umbrella of a single LLC, each DBA might require its own set of employees, accounting practices, and business operations.
This might complicate the overall management and operations of the business, making it difficult to maintain a consistent approach across all DBAs.
How to Register Multiple DBAs under One LLC
The specific process of registering multiple DBAs under one LLC can vary depending on state laws. However, the general steps typically involved include:
- Conducting a name search: You need to ensure that the DBA names you are considering are not already in use. This involves a name search through the state’s Secretary of State database.
- Filing the necessary documents: Once you have chosen an available name, you need to fill out the relevant forms and file them with the correct state agency.
- Publishing a statement: Depending on your state’s requirements, you might need to publish a statement in a local newspaper about your intention to use your chosen DBA name.
- Paying the fees: You need to pay certain fees associated with the filing of DBA names. These fees vary from state to state.
- Maintaining compliance: Lastly, it’s essential to maintain compliance with all state rules and regulations regarding using a DBA. This may include renewing the DBA registration after a certain period.
Frequently Asked Questions
The Employer Identification Number (EIN) is tied to the LLC, not the DBA. Therefore, multiple DBAs under one LLC would share the same EIN.
How many DBAs can an LLC have?
There’s no legal limit on how many DBAs an LLC can have. However, every DBA must be separately registered and must comply with state rules and regulations.
Is it better to have multiple LLCs or multiple DBAs?
The decision between creating multiple LLCs or registering multiple DBAs depends on the specific needs of the business. Multiple LLCs may offer more legal protection, while multiple DBAs under one LLC could be easier and more cost-effective to manage.
Can DBAs have separate bank accounts?
No, DBAs cannot have separate bank accounts. Since a DBA is not a separate legal entity, but rather another name for an existing legal entity, the DBA would not have its own separate bank account. The account would be under the LLC’s name.
Conclusion
One LLC can indeed operate under multiple DBAs. This strategy provides a pathway for businesses to cost-effectively diversify their brand and reduce the complexities of business administration.
However, it’s vital to remain cautious about potential drawbacks such as brand confusion and operational complexities.
Every business owner contemplating this approach should consult with a legal and financial expert first, to fully grasp the nuances and potential implications of their decision. Feel free to share your thoughts in the comment section or contact us for more information.
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