Beware of the Parent LLC that Owns a Subsidiary LLC (2024)

[@keytlaw]

So what are your thoughts, form a parent subsidiary entity structure or is it not for you?

[@RichardKeyt]

Thanks for asking. If there are one or more good business reasons to have a parent then it makes sense. For example parent owns three LLCs that each operate a restaurant. Purpose is to manage and administer the three businesses. Another purpose is to limit liability if one of the restaurants gets a big judgment against it. Consider the difference if Best Restaurants, LLC owns three restaurants each valued at $1 million vs. a parent called Best Restaurants, LLC that owns three subsidiary LLCs that each owns a restaurant worth $1 million. In the first scenario of somebody is killed or injured in a restaurant and the LLC gets a judgment against it for $5 million all three restaurants and $3 million are lost. In the second scenario if the accident occurs at the restaurant owned by Subsidiary 1, LLC, and the plaintiff gets a $5 million judgment the plaintiff will get the insurance plus $1 million owned by Subsidiary 1, LLC, but the $2 million in assets in the other two subsidiary LLCs are protected.

[@gypsypath1]

Richard Keyt But wouldn’t the judgement breach the corporate veil? If so, why wouldn’t the assets of the parent (LLCs 2 and) be taken?

[@40EntrepreneurDrive]

@@RichardKeyt oh, I see. So it's only the entity that is involved with a misfortune that gets penalized. I misunderstood thinking that regardless of what happened with the child/children companies, the parent company always gets the responsibility(as in real life usually 😇)

[@naimles264]

In this example the property management company should be another subsidiary, not the parent company, and the owner would set up a different LLC acting as the parent, a holding company.

[@10belowfreezing]

I'm suddenly really into law

[@dirkdiggler9482]

I don't really understand the vehicle accident scenario shown. If that happened to me, and I wasn't currently in the process of any sort of transaction, but was just driving along and had an accident on my own time, how could my company assets possibly be breached? Why would my personal liability for that accident have anything to do with my business holdings? Why wouldn't the accident just be processed as any other car accident, with my vehicle insurance acting as my legal shield?

[@ddillard143]

The parent company isn't supposed to do any business with the public. They only supposed to hold the assets. When this happens who is going to sue the parent company? so it's protect it. Now if a subsidiary AKA and operating company is sued all other subsidiaries isolated from that. And if you have a charging order protection and the parent company holds all the assets and has a lien against the subsidiary, you're doubly protected

[@kianzasmommy11]

Right. This is exactly what I was thinking. When the video got to the part where it was saying that if the parent/holding company gets sued by a creditor it can take any non-LLC assets. I started scratching my head on that part. I thought a holding company doesn’t do any business, though. Just mainly holding/owning. 🤔

[@surveytestmoney2550]

@@kianzasmommy11 ✔️EXACTLY‼️🤪Which is troubling being that they're supposed to be the professionals w/all the knowledge clients lean on to trust. That's scary..👀

[@Ryo8761]

@@surveytestmoney2550 I don't think that she specify that the Parent LLC as a holding LLC. I agree that it should made clear. Similar to your understanding, within this video's example, the Parent LLC is probably an operating and not a Holding LLC.

[@deontechristian6506]

can a s corp be a parent company

[@MrNateSPF]

If it owns other companies, yes ;-)

[@dreamergirlbaby]

Can someone help me because I’m confused. So I live in South Carolina and I have an already established LLC (let’s call it LLC B). I want to make LLC B a subsidiary and create a brand new LLC that will be my parent company that LLC B could be under (Let’s call it LLC A.) So once I go register my new LLC A with South Carolina how do I let South Carolina and the IRS know that I want LLC B to be under LLC A ??

[@keytlaw]

You have to transfer ownership of LLC B to LLC A. In Arizona we would do that by having the owner of LLC B sign a document called an Assignment of Membership Interest Agreement that states on a specific date the owner of LLC B assigns all ownership interest in LLC B to LLC A. In Arizona we would also need to file an amendment to the LLC's Articles of Organization with the State of Arizona that changes the owner on the public record from the prior owner to LLC A. I also advise amending the Operating Agreement of LLC B to reflect the change of ownership. Check with SC to see if LLC B would have to file a document with the appropriate state agency.

[@mafman7976]

What if you initially fund your business using ROBS, thereby setting up a C Corporation? Would forming LLC subsidiaries under that C Corporation afford any more protection than the LLC Parent / LLC Subsidiary structure?

[@randydeherder]

I watched this video like 3x... was having a hard time concentrating on LLC... schmell L C.... you are so pretty! Subscribed*

[@yosephstephens]

how would you structure a parent company operating agreement?

[@keytlaw]

Arizona actually has a new LLC law as of September 1st of 2019, so according to the new law your Operating Agreement has to be specifically written to eliminate any problems

[@kelliharris9831]

You said if the parent company is sued the subsidiary companies can be affected until the judgement is satisfied. Can the reverse happen? If a subsidiary llc is sued can they come after the parent llc?

[@Astoldbykevin]

To my knowledge the liability is only one way. If you sue the parent company all their assets are affected. If you sue a subsidiary you can only go after their assets.

[@MrNateSPF]

Ideally that would block it but the other side may possibly try to show the child wasn't actually operated as an LLC or the parent was actually responsible for the damages. Often the parent is setup to only conduct business with the children businesses and yourself, then any interactions need to be documented as business transactions to show they are independent businesses.

[@40EntrepreneurDrive]

Ok, this is my post-video comment. My parent LLC is mostly online, whereas the child company is planned to be a brick and mortar. I am thinking most of my asset protection needs to cover the physical business, not the digital business. But if something happens, as in your car crash analogy, the top business/ parent company is most liable regardless-correct? So is your recommendation for my parent to sell my child(to me, the individual)? Once a business is registered in a state it cant be re-registered elsewhere right? So any remedy for how to minimize possible issues as you illustrated if we are already set up as an LLC owning an LLC? I'm in Texas if makes a difference.

[@BstarsWorld]

If I shoot music videos and live in California, but I want to form an LLC in Nevada do I have to register in CA? I do not have a physical office in California, all my music videos are booked online and I shoot them on location anywhere. Just wondering 🤔

[@keytlaw]

No you don't have to register in California

[@hohnjopkins5705]

You have to open a P.O. Box and delegate a registered agent to work on behalf of the llc name.

[@surveytestmoney2550]

@@hohnjopkins5705🤷🏽‍♀️ If you've hired a *Registered Agent* to work on your behalf *why on Earth* would you get or have need of a PO box when your agents address is what would be used for all business mailings? 👀

[@michaelfisher4149]

I heard this is not applicable to Wyoming LLCs no? Charging order protection entity?

[@larryjones521]

Dear Taylor: Should I instead operate as a DBA? I have 3 different business practices

[@blazayblazay8888]

Thank you for this! Can the subsidiary use the age of the parent company for business credit?

[@richardrivera7317]

Series LLC is the way I go. Just pay for the “Parent” & all the “Kids” are free to set up.

[@keytlaw]

Maybe if the state of formation has series LLCs. Arizona does not have series LLCs.

[@surveytestmoney2550]

😲A *Series* LLC⁉️🤪Now you've just freaked out & overloaded my brain (Just when I thought I had everything all figured out!) w/a *WHOLE new* thought process of information added to the already crowded deck! Ughh‼️Off to *Google* I go‼️😫

[@surveytestmoney2550]

@@keytlaw Welp. Neither *CT* nor *FL* allows for the formation of a *"Series LLC"* So it's back to my original plan of a *"Single Member LLC"* 🙆🏽‍♀️🤷🏽‍♀️💁🏽‍♀️

[@hambox2008]

What if the parent is just a holding llc?

[@AlexG-zi6jr]

Thanks for your video. Like your style! Would like to ask some questions. I would like to form a Wyoming corporation for anonymity purpose. I also would like to build credit for both and use tax strategies with S Corp and pay myself a salary. Should I form an LLC in Wyoming and file a foreign S corp in California? Does it have to have exact business name? Should I buy property, car and other assets with Wyoming or California company for asset protection? Should I pay myself from which Wyoming or California company?

[@Frankiep72]

It is my understanding that if the parent is an Arizona LLC, the charging order is the one and only exclusive remedy a creditor has, correct? The creditor can't foreclose or force the LLC to make distributions, or sell its assets.

[@hohnjopkins5705]

Frank Peraza actually it can, but there is a fine line between the companies assets and the owners asset. The creditor can only claim as far as the company can declare upon claim

[@Vilhelm7198]

Taylor, Your intelligence, beauty and upbeat personality are refreshing and informative to watch and listen to. Keep it up!

[@jasonbowman7190]

😭 The last video I watched said it was okay... I think I'll go play with my Lego's now..😶😶😶😁

[@AretusSmithJr]

This is why you form the parent company aka holding company in Wyoming or Nevada.

[@hohnjopkins5705]

J.G. Homework that’s up to you sherlock

[@surveytestmoney2550]

No..THIS is why you should not follow information found online & instead do your due diligence and homework. Go seek out & get expert professional advice BEFORE losing EVERYTHING to ignorance. What was that saying about Ignorance & the law?👀

[@scott11219]

Another great informative video

[@keytlaw]

thank you we appreciate it!

[@thebestblainejohnson]

Your analogy about driving to a property is off base, UNLESS the vehicle you are driving is owned by the parent or subsidiary LLC. If you are the sole owner of the vehicle, "your" LLCs are not reachable in a suit against YOU. These are the basic reasons for LLC formation in the first place.

[@40EntrepreneurDrive]

Commenting before I watch thinking "Uh, oh. This is how my businesses are set up."👀

[@josephabdo6664]

Lord she is gorgeous😍

[@khafreahmose8768]

Cfmr

[@jzk2020]

I love your big eyes.... 👀😍😝

[@keytlaw]

thank you

[@surveytestmoney2550]

😲😆😶🤐👀

[@TimG...]

It's sub-sid-ee-ary, not sub-sid-ary or sub-sid-ee. Kinda hard to take advice from someone who can't pronounce it correctly

[@keytlaw]

Thanks for the input. Taylor lives in Arizona now, but she still has an accent from where she grew up.

[@kingmarothementor4773]

Shut up nigga. She did fine.

[@nonenone9815]

@@kingmarothementor4773 😂 Lol

[@njraman5263]

For a business topic, dress business like, not as if you going for a walk on the beach

[@jahweid759]

Pretty good info but lots of wasted time begging for likes and subscribers

[@keytlaw]

it's a call to action and the only thing said is please like this video and subscribe to our channel for more videos, One simple sentence