A lot of entrepreneurs have multiple ideas for starting different types of businesses. There are several ways these separate businesses can be structured. It is very important to form these businesses correctly from the start to maximize liability protection.
One way to structure your multiple business ventures is to form a single business entity and register a fictitious name (also called “Doing Business As” name, or DBA) for each individual business. This structure can be thought of as owning one big house, and inside the house you have many different rooms, each with their own name: the kitchen, the dining room, the living room, etc.
Imagine that you want to start a restaurant and you form an LLC called Joe’s Restaurant LLC. You work with local butcher shops to get fresh meat, and you realize that you could also sell a line of prepackaged fresh meals for busy people to take home and heat up themselves. You also get the idea that you could sell desserts online. Having three different product lines under one name can create several issues. For one, it will be incredibly difficult to market. To help clarify the distinction in your different businesses, you can file two additional DBAs: Joe’s Fresh Meals and Joe’s Desserts. Both of these are registered as fictitious names under your LLC. However, it is crucial to take note that a fictitious name does not create a new entity and does not provide you with separate liability protection. This means that all three of these businesses share liability since they are not distinct business entities. Liability protection only comes from the proper formation and complying with the formalities of a business entity such as an LLC or Corporation.
Since you filed the paperwork and statutory formalities you might believe you are operating three different companies, but in reality you are not. You actually only have one business entity formed. If one of the customers from any one of these businesses decides to sue, all three businesses risk having their assets and income seized. Obviously, this is not a favorable outcome and it would be best to optimize liability protection for each separate venture. The best way to separate and keep liability between your multiple businesses separated and separate from you (and your personal assets) is to create separate legal entities.
It is important to contact a Florida licensed attorney if you’d like to discuss the best way to form your business. You can contact Wheeler Legal PLLC by calling (321) 209-5995 to schedule a consultation and find out how we can help you protect your assets.
Disclaimer: The information contained above is provided for general informational purposes only, and does not constitute legal advice, nor is it intended to create an attorney-client relationship. This firm aims to provide quality information, but we make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained in or linked to this post. Nothing provided herein should be used as a substitute for the advice of competent counsel.