Can I register an umbrella business to "hold" two other businesses?


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I have 2 "businesses" which I would like to register under 1 umbrella business for the sake of taxes.

First I have a web/apps business (1 website, 2 additonal apps, soon to be 3) that isn't generating revenue.

Second I am doing 1099 contract work (under my real name).

Can I register 1 business where I can do all of these taxes under? Will I need to have my 1099 stuff updated to be in the businesses name?

Getting Started Tax

asked Jul 21 '11 at 00:29
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Matthew
101 points

3 Answers


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First, for federal tax purposes it doesn't matter what name you use, whether you register that name with your state, or if you form an LLC. In any of these cases, the IRS is going to tax you as a sole proprietor, which means you need to file a Schedule C. They consider a single member LLC a "disregarded entity", so they will act as if it does not exist in determining tax liability.

You should already be filing a Schedule C if your self-employment activity exceeds $600/year.

The question is this: Can you combine the income and expenses for both activities into one Schedule C, or do you have to file separate Schedule Cs for each activity.

Basically it depend on how close the two activities are and if you are operating them as one business. If your contract work is web related (which I'm assuming it probably is), then I would say go ahead and combine them. Many companies do consulting and also develop their own in-house stuff.

If it's contract work for manufacturing widgets, you'd probably be better off separating them unless you can show some clear connection (like, your web apps are also about widgets, and it's part of your overall widget-related empire).

Here is a good reference I found on the topic from an actual tax person:
http://www.kraigklinke.net/2011/04/can-single-member-llc-filing-as.html

answered Jan 8 '12 at 21:56
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Emma Mc Creary
21 points
  • Why do the businesses need to be related before I can move them under an LLC umbrella? If I owned a hot dog vendor business as an LLC, and I wanted to start doing web consulting on the side under that LLC, what would stop me or what drawbacks would I encounter? – Joe A 7 years ago
  • You can add whatever business you want under one LLC umbrella, but that won't affect your tax liability because the IRS disregards LLCs. LLC = liability protection. No affect on taxes. – Emma Mc Creary 7 years ago
  • Thanks for your answer! – Joe A 7 years ago

1

Warning: I'm not an accountant, but you'll probably want to do one of these options.

  • Option 1] operate as a sole proprietor where you just do a Schedule C on your taxes. This won't affect your 1099 since it's in your name. All your business stuff you just put on your personal taxes. You can get DBA's 'doing business as' so you can personally operate as your other businesses.
  • Option 2] register an official business like an LLC (not sure if you can do it with just one person in Kentucky). You'll then get a federal EIN. You can use this as your primary company and still get DBA's for any other .com's or names you want to do business as. Won't really change your 1099 situation, you will then have to chat with that person give them your EIN and fill out a W9 with your business info and then you can just operate as your business.
answered Jul 21 '11 at 13:54
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Ryan Doom
5,472 points
  • @Matthew Yes, don't make it complicated. Register one LLC and just do all of your "business" under that. It sounds like you might already even have an LLC. – Michael Pryor 8 years ago

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Registering an LLC with the state in your situation (as I understand it) will not likely change the tax that you owe. Rather, it provides liability protection—protecting your personal assets in the event that your business were sued.

answered Jul 21 '11 at 22:36
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Ian Cooper
51 points

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