I have an LLC formed that I was planning on using as an umbrella corp for a few different business ideas, a couple of them are in the tech industry, and one is already started and is just a DBA. Would it be best to set each company up as it's own entity even if they all have the same team as my umbrella corp?
It depends :)
Financing:
When you're ready to start raising funds, C Corps (especially Delaware) are still preferred in the VC world although some angels are increasingly willing to invest in LLCs.
Risk:
When you're just starting off it's okay to have a holding LLC with DBAs. As you grow one or more of the ideas, you may want to separate out the risk so that if one company has issues it doesn't hurt the others. But it isn't necessary when you're early on. Once you add employees, cofounders, and/or investors, it's probably time. Your holding LLC could have equity in the idea and you could setup the idea as a C Corp. It's a good structure.
Also -- this ain't legal advice. Just general blahblahblah about legal structure.
Really good article from a fellow Seattle startup attorney here: http://www.startuplawblog.com/choice-of-entity/
Answered 10 years ago
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