Limited Liability Companies: How Many Should You Own?

limited liability companiesMany entrepreneurs have big plans for their startups. Unfortunately, as part of those big plans, they often want to treat a small business as if it is a large complex organization that needs multiple limited liability companies (LLCs) for asset protection and tax avoidance.

Trump’s Limited Liability Companies

According to a recent Wall Street Journal article, Donald Trump has at least 96 LLCs that he uses to protect what he owns and to legally minimize taxes paid. This is typical for a large business empire, particularly one that involves intellectual property licensing (the Trump brand) and real estate ownership.

As A Small Business, Should You Have More Than One Limited Liability Company?

According to Texas Business Lawyer Mike Young, author of How to Form a Texas LLC, as a general rule of thumb it makes sense to set up separate LLCs for each asset or annual revenue stream that exceeds $100,000 in value. In addition to the potential tax advantages, each LLC serves as a separate protective basket for one of your nest eggs in case something goes wrong with one venture (e.g. bankruptcy) or asset (e.g. slip-and-fall personal injury lawsuit).

Of course, each entrepreneur has a unique story with specific legal needs. This means you’ll want to discuss your assets and income streams with an experienced business lawyer. Working together with your accountant, you can set up the number of limited liability companies you need to achieve your goals.

Author Mike Young, Esq.

Internet Lawyer Mike Young provides contracts and other efficient legal solutions to business owners and C-level executives of privately held companies. To get legal advice from Mike, click here to set up your phone consultation with him.

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