Can One LLC Have Two DBAs?

Filing a formal declaration as a "doing business as," or DBA for short, is an easy way to avoid the hassles of formally organizing a business entity with the Internal Revenue Service and your state department of revenue or similar agency. While the ease of DBAs allows individuals as well as limited liability companies to create an informal business identity and tie it to their tax identity, a DBA might not be an ideal solution for some business owners, particularly those who wish to register two DBAs under the same LLC.

Because DBAs are relatively simple to set up with your state, creating two DBAs for an LLC to operate under is technically quite possible. You may choose to spin off a second DBA to provide an identity for a completely unrelated business venture owned by your LLC — such as opening a DBA to provide an identity for a pet store after already opening a DBA to give your bridal boutique a name. DBAs aren’t treated as individual companies and are merely different identities you give to the LLC’s multiple operations.

Although there’s no reason you couldn’t open two DBAs under the umbrella of one LLC, doing so creates a bookkeeping situation that can be difficult to sort out. Because the DBAs aren’t independent businesses, you’ll be operating a single venture in the eyes of the Internal Revenue Service, even if you keep two independent sets of books. This arrangement may make it difficult to claim losses for one DBA if the other DBA is showing a profit, and it makes it impossible to separate revenues when filing your taxes. It also creates a bookkeeping system that’s much more complicated than merely running two independent businesses, leading to added bookkeeping expenses.

You formed an LLC to protect your personal assets and credit should your business ventures fail catastrophically, as well as to shield you from legal liabilities that may arise from operation of the business. Everything that falls under that LLC’s umbrella of operations may be held liable in the event of disaster, and a problem with one DBA, such as a major loss or a pricey settlement, immediately bleeds into the other DBA. Because of this, an LLC that operates two DBAs may lose both businesses if one fails.

Operating multiple DBAs under a parent LLC holding company also adds severe complications in the case you choose to sell one of the companies you own. Because the DBAs’ books are technically intertwined in the eyes of the IRS, and you don’t have a stand-alone business entity to market, it may be difficult to sell one venture in the future. You may be able to sell the entire LLC to an investor who wants both DBA businesses, but it’s unlikely. Stand-alone businesses are much easier to sell.