Small business owners today often make money through multiple ventures. A restaurateur might open a wine store, or a copy editor could also work part-time as a caterer.
You may have wondered how to best structure your multiple projects. Should you create one corporation for all of them? Should you create an LLC for every one?
Answering these questions is important from a legal and marketing perspective. You need to think about the target markets and customers of each venture when it comes to marketing. Are they complementary? Are they relevant? Will they appeal to the exact same clientele?
It makes sense, if so, to market both under the same brand. It may be logical for a wine shop and restaurant to use the same branding.
Your businesses may target different types of customers (for instance, copy editors and caterers). You can use different business names, websites and branding to differentiate each venture.
How do you legally structure multiple ventures?
How to structure multiple businesses
can be legally structured in three different ways. Each option comes with its own set of pros and cons – the “right” choice depends on your individual needs. Consider these factors:
Option 1: Create separate corporations or LLCs for each venture
For each venture, you can create an LLC or corporation. You can, for example, form an LLC to run a bookkeeping service and another one for selling handmade soaps.
This approach may seem simple, but it will require a lot of paperwork. Separate forms (i.e. You’ll need to submit separate forms (i.e. If you have formed corporations, then you will need to submit separate tax forms for every corporation. Consider another option if you want to reduce your administrative burden.
Real estate investors are the only exception to this rule. You may consider forming a separate LLC for each rental property or real estate you invest in. This will protect your investment. If LLC “A’s” assets are sued, then only those belonging to property “A”, will be affected. You are protected from lawsuits, and so are the assets of Property B, or Property C.
