Is it legal to have one business entity for 2 different type of businesses?
I am thinking to open 1-person-managed LLC that is going to do 2 different type of businesses:
1) software development / websites development
2) dropshiping shop of sporting goods. (developed by myself)
Is it legal to have one business entity for this or it should be 2 different company?
7 attorney answers
It's certainly legal. However, for liability purposes, you may want to consider getting separate entities. If you don't, you should at least have adequate insurance.
A full consultation would be necessary to properly advise you.
Yes, applicable laws permit a single entity (limited liability company or corporation) to have multiple lines of business.
Whether that approach is prudent (e.g., a financial or legal disaster in one line of business can take down the other) is a separate issue.
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The standard articles of incorporation or organization permit the entity to conduct any and all legal business and there is no obstacle to having one or more types of business in a single entity. Where one activity is "dangerous" e.g. making something that could malfunction and cause harm, those activities are "usually" spun off into a separate entity, although sometimes insurance for that activity can be a substitute for a second entity.
The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts...
It is entirely legal to do this, but not advisable--mostly due to potential liabilities stemming from one business operation that could imperil the related, though clearly distinct, other operation under the same corporate umbrella. There could also be tax considerations that would inform separating your enterprises under two different organizational umbrellas--whether this be by two LLCs, two corporations, or one LLC and one corporation. I strongly advise consulting with both an experienced corporate lawyer and an experienced CPA before making any definite steps towards either path. Best wishes to you in 2020.
Absolutely. You can run several businesses out of an individual entity. However, this does not mean that running several businesses out of an individual entity is the best way to conduct your businesses.
You should sit down with an attorney and discuss all the facts and circumstances surrounding your businesses, in order to determine whether or not running several businesses out of an individual entity will not backfire.
It is always good to sit down with an attorney when determining which type of business entity to utilize. For instance, an LLC is not required to pay Federal Income tax; however, taxes are paid at the member level. Despite this, California still makes sure to make money by imposing an annual franchise tax of $800.00 on LLCs and a statutory fee on the LLC’s total annual income from California sources up to a maximum fee of $11,790.00.
However, LLCs still have their drawbacks. Although incorporation can be pretty straightforward and can be done with a simple capital structure that is not costly. However, an LLC requires an Operating Agreement with numerous members, and can become extremely complex and expensive to draft and administer.
Once again, this is a matter that should always be discussed with an attorney to determine which business entity fits your needs.
This answer is offered for informational purposes only. It is not offered as, and does not constitute, legal advice. The laws are somewhat different in every state. You should rely only on advice given to you during a personal consultation by a qualified and licensed attorney in your area who is thoroughly familiar with state laws and the area of practice that your issue relates.
It is legal to have one company do both these things. However, there may be reasons to have them be two separate companies. You may also want a corporation instead of an LLC, or maybe one of each. You need to consult an attorney who specializes in business formations to determine the best structure for these businesses.
Yes one entity could be used for both businesses.
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