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Can an LLC Own More Than One Business?

An LLC can own more than one business and own businesses of different types. LLCs can possess ownership interest in other LLCs and partnerships. LLCs can also own shares in a c-corp or professional corporation. In fact, LLCs are frequently used as holding companies. LLC holding companies allow members to own and profit from multiple businesses while also limiting liability and increasing tax efficiency.

What you'll find in this article:
What is an LLC Holding Company?
How to Set up an LLC Holding Company
LLC Holding Company FAQs

What is an LLC Holding Company?

An LLC holding company is an LLC established to own other businesses. LLC holding companies don’t create products or do business themselves—they simply “hold” assets.

Often, an LLC holding company is referred to as a parent company, while the businesses the holding company owns are called subsidiaries. Holding companies can purchase or create their subsidiaries. A holding company maintains parent company status by owning a controlling interest—at least 51%—in all its subsidiaries.

As the majority owner, a holding company may establish a subsidiary’s financial policies and oversee management decisions but is rarely involved in day-to-day operations.

Advantages of Using a Holding Company

There are numerous benefits to using a holding company rather than operating multiple businesses under a single company or simply owning a number of businesses without a holding company.

  • Increased liability protection. This is the primary benefit of using a holding company. Because a parent company is a separate entity from its subsidiaries, as the owner of a holding company, you’re not directly liable for your subsidiaries’ debt or any lawsuits leveled against them.
  • Tax efficiency. Subsidiaries file their own taxes, so your holding company only pays taxes on the dividends and/or distributions it receives from subsidiaries. Some holding companies also capitalize on regional tax policies by operating (or having their subsidiaries operate) in jurisdictions with favorable tax rates.
  • Lower-interest funding. By providing their subsidiaries with startup funds, holding companies can keep subsidiaries from taking out loans and owing interest. Additionally, an established holding company may be able to get lower-interest loans more easily than a newly-started subsidiary and can then use this money to fund subsidiaries.
  • Ability to take more investment risks. Because holding companies are shielded from the liabilities of their subsidiaries, they can invest in innovative or risky projects without fear of taking on their subsidiaries’ debts if their projects fail.


Disadvantages of a Using a Holding Company

Operating a holding company isn’t without drawbacks.

  • Separation of assets. Because your holding company and subsidiaries are separate entities, you can’t just take assets from one subsidiary for use by your parent company or another subsidiary. Doing so erodes your limited liability protection. You’ll have to jump through a few legal hoops first, like setting up a loan or negotiating a sale and purchase of assets from one company to another.
  • Increased record-keeping and filing costs. You’ll have to maintain internal records along with state filings and fees for your holding company and all subsidiaries, in addition to separate tax filings and payments.
  • Possible management challenges. If a holding company doesn’t own 100% of a subsidiary, conflicts about business direction may arise if the holding company and the subsidiary’s minority owners aren’t on the same page.


Holding Company vs Series LLC

Holding companies and series LLCs share a similar structure. Series LLCs are comprised of a master LLC and a string of “child” LLCs, also called cells. In a series LLC, the master LLC and its cells are insulated from the liabilities of other cells. So, if one cell is sued, no other LLC in the series is held responsible for that cell’s legal obligations.

Forming a series LLC can be an alternative to starting a holding company, depending on the location of your business(es). Series LLCs aren’t available in all states—only 22 states, plus the District of Columbia and Puerto Rico offer series LLC registration. Additionally, liability protections for the master LLC and its cell aren’t complete in all jurisdictions. In Minnesota, North Dakota, and Wisconsin, cells can be held accountable for the financial liabilities of other cells and cannot make their own contacts (only the master LLC can make contracts).

How to Set up an LLC Holding Company

Setting up an LLC Holding Company is pretty much the same as starting any other LLC.

You’ll need to:

When authoring your operating agreement, you’ll want to include provisions for situations like acquiring new subsidiaries or details on the role members will play in managing subsidiaries (if applicable).

How to Set up Subsidiaries

As the owner of an LLC holding company, you can purchase or create subsidiaries. Either way, the process isn’t much different from buying or forming a company in general—you’ll just need to list your LLC holding company as the owner on state registration documents. Keep in mind that each subsidiary must be separately registered with the state, have its own EIN and bank account, and pay its own taxes.

LLC Holding Company FAQs

Can I create an LLC as a holding company?

Yes. Creating an LLC as a holding company is a very common practice.

Can an LLC invest in another company?

Yes. LLCs can invest in other LLCs, partnerships, and for-profit corporations. An LLC holding company must own at least 51% of all subsidiaries.

What business entity types can an LLC own?

LLCs can own other LLCs, including PLLCs, as well as c-corporations and professional corporations. An LLC can also be a partner in a partnership such as an LLP. LLCs are unable to own s-corps because s-corps can only be owned by individuals, certain trusts, or estates.

Can you have multiple businesses under one EIN?

It depends. The answer is no if you operate multiple business that are legally established as separate entities under state law. So, if you register Rainy Day Brewery LLC and then also register Rainy Day Wines LLC as a new business, you’ll need a EIN for Rainy Day Wines. Because they are registered as separate business entities, holding companies and subsidiaries all need separate EINs.

However, the answer is yes if you operate multiple businesses that are not legally established as separate entities under state law. For example, you may own Rainy Day Brewery LLC and decide to expand under the DBA Rainy Day Wines. Because Rainy Day Wines isn’t a legally separate business entity, you don’t need a new EIN.

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