In this video, attorney Thomas B. Burton answers a common question about LLCs: can you have multiple businesses under one LLC? He discusses the advantages and disadvantages of this approach, and explains the legal and tax implications involved. From flexibility and simplicity, to potential liabilities and reporting requirements, he covers the key considerations to keep in mind when deciding whether to operate multiple businesses under one LLC. Watch to learn more on this topic.
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Hello I'm Attorney Thomas Burton and welcome back to our popular Question and Answer Series here on the channel. Today's question has to do with limited liability companies and it comes from Madison and the writer asks the following:
"Could you do a business service which is different from your LLC name?"
"My LLC name is of one academic field, however could I do a service which is of a different academic field under my LLC? I have an LLC and the LLC name covering one knowledge field. Could I do a service of another field if the field is not included in my LLC name? Could my business do a different activity which is different from my LLC name?
That's the question from Madison, Wisconsin. Thank you for submitting it today.
First, let's start with the short answer which is yes, you can operate multiple service lines under one LLC.
The LLC is the structure, the business entity from which you operate businesses. So if you think about, let's use the example of Alphabet, the parent company of Google. They offer many different services under the parent Alphabet which is a C corporation but they have advertising, they have the search engine, they have Google Maps etc.
You can offer different service lines under one corporate entity.
What it strikes me as is your name sounds specific to the one academic field and I don't know what that is but you're thinking does this name work in another academic field. Now outside limited industries like there's certain regulated industries like insurance comes to mind where you can't use insurance in the name of your business unless you really are licensed and are an insurance business or other regulated industries.
Your name, there's two sides of this, you can pick whatever name that's available and legal to use in Wisconsin for your LLC and then there's the marketing side. So if your one name is super specific like 'Rob's Lawn Mowing' and then you try to use Rob's Lawn Mowing LLC to also offer, you know, let's say a bakery shop, you could do that but the name for your branding is going to get awkward. In that case, you could decide whether you want to operate, use one LLC with a doing business as for the other service line but in Wisconsin, we don't have this really laid out way of doing it, doing business as you can file a registration of trade name with the department of financial institutions but anyway, if you have two service businesses that are very distinct like lawn mowing and the bakery store, they're doing different things, you might want to set up an LLC for each, especially if you think the revenue is going to be significant and then the liabilities because lawn mowing, you've got certain liabilities going over to people's homes and maybe you have employees and then the bake shop, you maybe own a property where people are coming and going and the whole point of an LLC is to keep your assets and liabilities from one business protected from another.
Now, with your academic field, my guess is you're the one providing the services. I don't know that but it sounds that way and that would be similar to perhaps a lawyer offering legal services. So if it's a type of professional service, maybe you have liability insurance that's going to cover you in both and then, taking the extra time and expense to set up a separate LLC, you're going to have to decide is that worth it to you because are any of those liabilities over here, different than the ones over here, in this academic field? If so, again, you should discuss with your lawyer more specifically exactly what academic it says here academic field, one one knowledge field and then service in another field. So my other suggestion for you is I want to go back to my point, your LLC the name, you can do any legal lawful business under an LLC. So I looked up the statute here and it's Wisconsin statute 183.0106, Nature of business - a limited liability company may be organized under this chapter for any lawful purpose. A limited liability company engaging in a business that is subject to the provisions of another chapter, may organize under this chapter, only if not prohibited by and subject to all limitations of the other chapter.
So that would be, like I mentioned in certain regulated businesses like insurance, they would be regulated by another chapter as well. So they may only do so but in your case, the academic services field, you can operate and have any name you want but I could see if you named your first LLC, the one you have, really specifically to your academic field and I don't know what that is but you maybe are thinking this could be awkward to use the same name in this other field.
There's another idea, if you don't want to form two separate LLC's, you want to keep using the same one, you could possibly just change the name of your current LLC to a more broad name like academic services LLC or academic consulting LLC or you know, more broad, let's say it's super narrow right now. You could just make it a more broad name and offer services in both fields. So that would be one option and if you already have the LLC filed, you could do this by filing an amendment to your articles of organization and that's $40 currently I believe. Filing a new LLC is a $130 online or $170 on paper but just remember, if you have the two LLC's which would be a fine method as well then you'll need to maintain two books and records and probably, ideally, should have two bank accounts for each LLC for the income and expenses to keep them separate from each other and then two annual reports for each LLC which in Wisconsin is a modest $25 per year but again, if you're the one providing the services and you know the revenue of each business, think through which option is better for you and then like I say, if the risks of one business could infect the other, like high liability, that's a bigger than reason to go with two separate LLCs. So one business remains distinct from the other, if you feel like, well, I operate in this academic field and I can do this service and this service but they're pretty related, the risks aren't different then maybe, you want to do it all under one LLC. It's up to you in your best judgment, if your concerns about this I suggest you work with a lawyer and walk through the scenarios of what those risks might be.
But in general, you can use the LLC name for any lawful purpose and if you feel it's just the name that's too specific, that's limiting you from marketing and branding and that sort of thing, I would consider just changing the name to something more broad and using it for that because even in LLC, let's say, you set it up for real estate investing and you named it one two three property rentals LLC but you want to use it for your academic services business now. I could see where it would seem awkward to tell people it's called one two three property rentals but you're offering academic services but you already have the LLC set up, so as if, if you had done no activity with it and you just want to use the structure, you could just change the name to the academic services LLC and then use it for that and you could change totally your line of business.
Now for an ongoing business, that's been going a long time, it may be hard to get rid of the connotations with the old name and then you might be better starting a new one completely but there's nothing preventing you legally, from offering different service lines through one LLC.
I thought this was an interesting question, thank you for asking. I hope it's helpful to other viewers on the channel. Thanks for watching and we'll see you next time.
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