How to Legally Structure Multiple Businesses: Complete Guide to Holding Companies, LLCs, and DBAs

Running one successful business is challenging enough. Running two, three, or more? That requires not just entrepreneurial skill but strategic legal planning. The difference between thriving with multiple ventures and watching one lawsuit destroy everything you have built often comes down to how you structure your businesses from the start.

Serial entrepreneurs face a critical question: should each business be a separate entity, or can multiple ventures operate under one umbrella? The answer affects your personal liability, tax obligations, administrative burden, and ability to raise capital. Get it wrong, and a problem in one business could contaminate everything else you own.

This guide breaks down the four main approaches to structuring multiple businesses, with specific guidance on when each works best.

The Four Options for Multi-Business Structures

Option 1: One LLC with Multiple DBAs

The simplest approach is operating multiple business lines under a single LLC, using DBAs (Doing Business As, also called trade names or fictitious business names) to create distinct brand identities.

How it works: Your LLC remains the single legal entity. You register DBAs for each business name you want to use publicly. Customers interact with "Mountain View Bakery" or "Sunrise Catering," but legally both operate under "Smith Holdings LLC."

Costs: DBA registration typically costs $10-$25 per name with 1-2 business days processing. There is no limit to how many DBAs one LLC can hold.

Advantages:

• Lowest cost and simplest administration
• One set of tax filings, one EIN, one operating agreement
• Easy to add new business lines quickly
• Unified accounting and reporting

Disadvantages:

• All business lines share the same liability pool. A lawsuit against the bakery puts the catering company's assets at risk.
• A creditor of one business can pursue assets from all businesses
• Limited options for bringing in investors or partners for just one business line
• Can complicate sale of individual business lines

Best for: Related businesses with similar risk profiles, side projects that do not warrant separate entities, or entrepreneurs testing new concepts before committing to separate LLCs.

Option 2: Separate LLCs for Each Business

Creating an independent LLC for each business provides maximum liability separation between ventures.

How it works: Each business has its own LLC with its own EIN, bank accounts, operating agreement, and tax filings. The businesses share no legal connection beyond common ownership.

Costs: Formation fees ($50-$500 per state), annual report fees ($50-$500 each), registered agent services ($50-$300 per LLC), plus accounting and legal costs for maintaining each entity.

Advantages:

• Complete liability isolation between businesses
• Clean structure for selling individual businesses
• Easy to bring in different partners or investors for each venture
• Clear separation for lenders and creditors

Disadvantages:

• Highest ongoing administrative burden
• Separate tax filings, bank accounts, and compliance requirements for each entity
• Costs multiply with each new business
• More complex personal tax situation as a multi-entity owner

Best for: Businesses with significantly different risk profiles, ventures with different ownership structures, or situations where you plan to sell one business independently.

Option 3: Holding Company with Subsidiary LLCs

A holding company structure places a parent LLC (that conducts no operations) as the owner of separate operating LLCs for each business.

How it works: The holding company owns 100% of each subsidiary LLC. The holding company itself has no employees, no customers, and no operations—it simply owns the other entities. Valuable assets like real estate, intellectual property, or equipment can be held at the parent level and leased to the operating companies.

Costs: Formation costs for the holding company plus each subsidiary, ongoing compliance for all entities, potentially higher accounting fees for inter-company transactions.

Advantages:

• Strong liability protection—a lawsuit against one operating company cannot reach assets held by the parent or other subsidiaries
• Centralized ownership and control
• Valuable assets protected at the holding company level
• Can facilitate easier access to financing (the holding company can borrow against multiple revenue streams)
• Professional appearance for investors and partners

Disadvantages:

• Most complex structure to establish and maintain
• Requires careful documentation of all inter-company transactions
• Must maintain strict separation to preserve liability protection
• Higher professional fees for legal and accounting

Best for: Entrepreneurs with multiple established businesses, significant assets to protect, or plans to raise institutional capital across multiple ventures.

Option 4: Series LLC

A series LLC allows multiple "series" or cells within a single LLC, where each series operates as a separate legal entity with its own assets, members, and liabilities.

How it works: One LLC filing creates the master entity, then you establish individual series for each business. Each series has separate liability protection without requiring separate state filings.

Costs: One formation fee for the master LLC. Additional series typically require no additional state filing fees, though each needs its own EIN and bank account.

Advantages:

• Cost-effective liability separation
• Reduced paperwork compared to separate LLCs
• Each series can have different members, managers, and ownership percentages
• Flexible tax treatment options for each series

Disadvantages:

• Only recognized in approximately 20 states
• Legal protections untested in many jurisdictions
• A court in a non-series state might not honor the liability separation
• Complex record-keeping requirements to maintain protections
• Banks and lenders may be unfamiliar with the structure

Best for: Real estate investors with multiple properties in series-LLC-friendly states, entrepreneurs with many low-to-moderate risk ventures, or situations where formation costs are a significant constraint.

Critical Factors for Choosing Your Structure

Risk Assessment

Not all businesses carry equal liability exposure. A consulting firm has different risk than a construction company. A food service business has different exposure than a software company.

Map out the liability profile of each business:

• Customer injury potential
• Product liability exposure
• Contract dispute likelihood
• Regulatory compliance risks
• Employee-related claims potential

Businesses with dramatically different risk profiles benefit most from complete separation.

Asset Protection Strategy

Consider where your valuable assets should live:

• Real estate and equipment can be held by a separate entity and leased to operating companies
• Intellectual property can be owned by one entity and licensed to others
• Cash reserves can be moved out of high-risk operating entities

A holding company structure facilitates this asset segregation naturally.

Growth and Investment Plans

Think about your future capital needs:

• Will you seek outside investors for specific businesses?
• Do you plan to sell one business while keeping others?
• Will different businesses have different partners?

Separate entities make bringing in investors or selling portions of your business portfolio cleaner.

Administrative Capacity

Be honest about your ability to manage complexity:

• Can you maintain separate books for each entity?
• Will you file multiple tax returns accurately?
• Can you afford professional help for compliance?

Entrepreneurs who struggle with the administrative demands of one business should think carefully before multiplying those requirements.

Tax Implications Across Structures

Pass-Through Taxation

Most small business structures—sole proprietorships, partnerships, LLCs, and S corporations—use pass-through taxation. Business income flows through to owners' personal tax returns.

The Qualified Business Income (QBI) deduction allows eligible pass-through entity owners to deduct up to 20% of qualified business income. This deduction became permanent under 2025 legislation. Multiple pass-through entities can each generate QBI deductions, subject to income limitations.

State Pass-Through Entity Tax Elections

Many states now allow pass-through entities to pay state income tax at the entity level, providing a workaround to the $10,000 federal deduction limit on state and local taxes. Business owners with multiple entities in states offering this election may benefit from making it for each qualifying entity.

Employment Tax Considerations

S corporation owners can pay themselves a reasonable salary (subject to employment taxes) while taking remaining profits as distributions (not subject to employment taxes). This strategy can work across multiple S corporations, though reasonable salary determinations must be made for each entity where you perform services.

Multi-Entity Complexity

Operating multiple entities increases tax planning complexity:

• Each LLC taxed as a partnership requires a separate Schedule K-1 for each member
• Transfers between commonly owned entities must be documented and may have tax consequences
• Losses in one entity generally cannot offset income in another unless specific ownership and activity tests are met

Work with a tax professional familiar with multi-entity planning to optimize your structure.

Maintaining Liability Protection

The liability protection of any business structure can be lost through "piercing the corporate veil"—a court determination that the entity is merely an alter ego of its owners and should not provide liability protection.

Keep Entities Separate

Each entity must operate as a genuinely separate business:

• Separate bank accounts for each entity
• Separate contracts signed in the correct entity name
• Separate accounting records
• No commingling of funds between entities
• Proper documentation for any inter-company transactions

Document Everything

When entities transact with each other:

• Create written agreements for any leases, loans, or service arrangements
• Charge market-rate prices
• Actually transfer money as documented
• Record the transactions in both entities' books

A holding company that loans money to a subsidiary should document the loan, charge interest, and receive payments—just like a third-party lender would.

Maintain Formalities

Even though LLCs have fewer formalities than corporations:

• Keep operating agreements current
• Document major decisions in writing
• File annual reports on time
• Maintain registered agents in each required state
• Keep entity information updated

Adequate Capitalization

Undercapitalized entities are more vulnerable to veil piercing. Each operating entity should have:

• Adequate cash reserves for normal operations
• Appropriate insurance coverage
• Access to credit or capital from the parent (documented as formal loans)

Common Mistakes to Avoid

Mixing personal and business finances: Using business accounts for personal expenses—or vice versa—undermines liability protection.

Ignoring state requirements: Operating in multiple states requires foreign registration and compliance in each state. Failure to register exposes you personally.

Informal inter-company dealings: Verbal agreements between your own companies are invisible to courts. Document everything.

Choosing structure based only on cost: The cheapest structure is not always the best. A lawsuit settlement that bankrupts multiple businesses far exceeds the cost of proper structuring.

Waiting too long to restructure: Transferring assets to new entities after a liability event raises fraudulent transfer concerns. Structure proactively.

Financial Tracking for Multi-Entity Operations

Managing multiple businesses demands financial discipline. Each entity needs its own:

• Chart of accounts
• Bank and credit card reconciliations
• Accounts receivable and payable tracking
• Financial statements
• Tax basis tracking

Inter-company transactions add complexity. A loan from the holding company to a subsidiary appears as an asset on one set of books and a liability on another. A lease payment from an operating company to an asset-holding entity is income for one and an expense for the other.

Without clear records, you cannot:

• Prove entities are genuinely separate (for liability protection)
• Accurately calculate taxes for each entity
• Assess the profitability of individual businesses
• Provide clean financials to investors or buyers

Beancount.io provides plain-text accounting that gives you complete transparency and control over your financial records across multiple entities. Every transaction is traceable, every report auditable—exactly what multi-entity operations require. With version-controlled records and AI-ready formatting, you can maintain the clear separation your legal structure demands. Get started for free and build the financial infrastructure that protects your business portfolio.