One LLC or Two?

[fullercustoms]

Hello, I am not sure if this is a dumb question or not but, before I go see the attorney I thought I should just ask.

I currently have a company that concentrates on a large amount of products over 100,000. With the economic times this company is not doing so well. I am going to start another company on the same basis as that company that concentrates on only a small specific market and concentrate on only about 800-1000 products.

My question is, Do I create a completely new LLC and make both companies their own individual entity (to protect the other if in fact one fails), or operate both companies under the same LLC. The companies will use the same suppliers, space and equipment and Me as president and employee. My own guess is, I would create a new LLC and that it will only make a difference to my Accountant. However I would appreciate some feedback and thoughts. Thank you.

[ZingerIntl]

What I would do is, because one is struggling, is start 2 more llc's. You are Principal on the top and make your LLC primary shareholder of the other two. This way YOU are one entity and each business is one entity in itself. this way the only thing someone could come after in a law suit would be assets of the business in default/trouble. but if your entity on the top has all the assets, and lends them to the entities doing business, which take all the risk, you will have very little at risk to lose. So if you every got sued or went bankrupt, you would shut down that entity, pull out all your assets, start anew shell, lend that shell your assets. Make sense?

[ZingerIntl]

Here is a picture.

[fullercustoms]

Very helpful information, that more than answers my question. In fact that is a much better idea. Thank you.

[JLeezer]

I hope you are doing a considerable amount of business if you are going to orchestrate such a complex tax strategy.

My best advice: Go discuss this with a highly qualified tax strategist! Do not go to discuss it with a tax preparer, accountant, lawyer, or any other professional that does not regularly handle tax strategy. A lawyer is great to talk to when you have questions concerning the law, such as how to prepare articles of incorporation. A tax preparer is an excellent resource for carrying out the plan put in place by a tax strategist. And an accountant is an excellent person to keep your finances straight throughout the year. However, none of them will do the job of a tax strategist as well as a tax strategist will do it.

[BusinessAdviser]

What I would do is, because one is struggling, is start 2 more llc's. You are Principal on the top and make your LLC primary shareholder of the other two. This way YOU are one entity and each business is one entity in itself. this way the only thing someone could come after in a law suit would be assets of the business in default/trouble. but if your entity on the top has all the assets, and lends them to the entities doing business, which take all the risk, you will have very little at risk to lose. So if you every got sued or went bankrupt, you would shut down that entity, pull out all your assets, start anew shell, lend that shell your assets. Make sense?

Two more LLCs? Doesn't make much sense. You have one. Start another for your new venture to protect each from the other. Very simple.

As for an LLC being the primary shareholder, there ARE no shareholders in an LLC. There are members. Corporations have shares of stock.

[BusinessAdviser]

I hope you are doing a considerable amount of business if you are going to orchestrate such a complex tax strategy.

My best advice: Go discuss this with a highly qualified tax strategist! Do not go to discuss it with a tax preparer, accountant, lawyer, or any other professional that does not regularly handle tax strategy. A lawyer is great to talk to when you have questions concerning the law, such as how to prepare articles of incorporation. A tax preparer is an excellent resource for carrying out the plan put in place by a tax strategist. And an accountant is an excellent person to keep your finances straight throughout the year. However, none of them will do the job of a tax strategist as well as a tax strategist will do it.

You really don't need to spend a ton of money on this one. You already nailed it on the head. Start a new entity for your new business. That way your new entity will not be liable for any debts of the previous company. Just don't comingle assets so as to pierce your corporate veil.