How Many LLCs Does My Small Business Need?

As a small business owner, you may be wondering how many Limited Liability Companies (LLCs) you need to protect your business assets and ensure success. According to attorney Tripp Watson, the answer depends on your business structure and strategy, as well as your ability to handle separate LLCs.

Every LLC is like a bucket that holds your business assets and liabilities. If a lawsuit is filed against one LLC, it does not necessarily affect the others. However, keeping track of transactions and records between multiple LLCs can be time-consuming and may not be practical for all business owners.

Small business owners should consider their current business operations and weigh their ability to handle separate LLCs, checking whether they are adequately insured and consulting with an attorney to determine the best structure for their business.

Different ownership structures can also affect the number of LLCs needed. For example, if a group of businesses have multiple owners with differing ownership structures, it may require separate LLCs to ensure that each owner has accurate ownership in each respective LLC and to avoid potential conflicts of interest.

In summary, the number of LLCs needed for a small business depends on several factors, including the business structure, ownership, and ability to handle separate LLCs. Consulting with an attorney and ensuring adequate insurance coverage can help small business owners determine the best structure for their business.