How should someone organize their expanding business?
Here, the best advice is to put your ‘eggs’ into separate baskets.
It’s another vital protective strategy. If you use one corporation
or LLC to operate one business, then use two separate entities to operate
two businesses and so forth. You want to separately incorporate
every business. If one fails or is sued, it won’t then endanger the others.
Multi-corporations (or LLCs) limit your losses. You can find corporate
graveyards littered with once-thriving companies that vanished because
all their ‘eggs’ were in one corporate basket. Even the smartest
entrepreneurs make mistakes and become saddled with losers. Your goal
is to isolate your potential losers from your present or future winners.
The only way to achieve this is to compartmentalize each venture with
a separate corporation or LLC. You can then more easily and safely shed
your losers and build on your winners. Operating your expanding business
through one entity will give you the advantage of operational simplicity,
but we think protection is far more important – particularly when
you’re small, growing and vulnerable. You can own multi-corporations
or LLCs through one holding company, LLC or limited partnership. Each
operating corporation or LLC would be a subsidiary. Or if you operate
through LLCs, check the Series LLC because each cell within the Series
can operate autonomously.