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    7 Replies Latest reply on Jun 5, 2010 8:46 AM by kevinrubel122

    Umbrella LLC and separate business entities

    SamLovell30 Wayfarer

      I have established Investment Holdings Company IHC as the
      "Mother Hub, Umbrella Company". We were going to operate a company under this LLC as a DBA, but when other businesses
      are formed or purchased, all would fall under our Investment Holdings Company, and could
      leave additional companies liable, along with other investments, if all
      additional companies are DBA's. I am currently doing research on how we
      place businesses under our mother hub, having separate legal protection
      for each, all while having profit dividends being paid yearly, to
      support the IHC and it's business endeavors. My question is this:

      How can we legally attach children companies to the mother hub to pay
      dividends, at the same time, having them as separate entities and legal
      liabilities? Does anyone have experience
      or know of anyone that can help?
        • Re: Umbrella LLC and separate business entities
          LUCKIEST Guide
          Umbrella LLC

          Who r u?? Go to Members page and share some info

          Do you have a Lawyer and an Accountant??
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            • Re: Umbrella LLC and separate business entities
              SamLovell30 Wayfarer
              I updated some of the info in the section. At the present time, we do not have a lawyer to save cost, but have those we can reach out to. The biggest issue with all start-ups is limiting the cost and not getting hammered by hourly lawyer & accountant fees. We have those we can go to, but I thought I would reach out to areas that are free first. I plan on being a part of this online community to do the same for others.
            • Re: Umbrella LLC and separate business entities
              ArcSine Scout
              Establish the "children" activities as LLCs; each activity as a separate LLC. Then have ParentCo (IHC) be the sole -- or at least majority -- owner of the equity (member units) of the "children" entities.

              (A similar arrangement could be used for corporate entities, creating parent-subsidiary arrangements, but from the title of your post I'm assuming that the context will involve LLCs.)

              As long as you're careful to respect the existence and formalities of the separate companies as legal entities in their own right, you can be reasonably assured that a legal claim against any one of the LLCs would not put the assets of the other entities at risk. I stress the "reasonably" part since there are no guarantees, but courts are somewhat loathe to "pierce the corporate veil" as long as the entities have indeed been treated by the controlling parties as separate legal entities. Your corporate- and LLC-law attorney can provide the details.

              With such an arrangement, the subsidiary LLCs can then funnel some or all of their profits up to the parent LLC, in the form of "distributions"; these are the LLC's analog to corporate dividends paid to the stockholders.
              • Re: Umbrella LLC and separate business entities
                ArcSine Scout
                Roger that, Sam...ain't nothing wrong with saving some coin whenever possible. As a side note, though, it's very true (I see it all the time) that when it comes to setting up LLCs and corporations, skimping on the professional advice can become a very expensive move, whose cost takes shape as an nasty surprise down the road. That's more true in certain situations (entities involving multiple shareholders / owners, say), and less true in more plain-vanilla, one-owner scenarios. It's good that you've got an attorney-friend to bounce ideas off of...maybe this chap can help you decide just when you need to hire some expertise, and when you can go the do-it-yourself route.

                'Nuff of that...I just wanted to say that you'll find that your objective, as stated in your opening post, is easily do-able. Set up a separate LLC for each company or business activity, and have each such LLC be owned by the parent company. As I mentioned previously, for the most part you can count on the entities not being held responsible for each other's obligations. At the same time, migrating the children's profits up to the parent can be accomplished under this structure in a very tax-efficient manner.

                Best of luck with your new venture!
                • Re: Umbrella LLC and separate business entities
                  kevinrubel122 Newbie
                  You may want to look into a Series LLC? What state/ thanks