Who Needs a Holding LLC or Umbrella LLC? | why have a holding/umbrella LLC and who should not

[@ElizabethPW]

If you're wondering if you should even have an LLC, here's a video: kzbin.info/www/bejne/a3TPcn2PjLl_iKM

[@fordshav]

Thank you!

[@Jayden.Playss]

Thanks for a great video, i had a couple questions. 1) if I formed an LLC for a business in 2023 and later in 2024 i form an umbrella/ holding LLC could I add that business in 2023 into it ? 2) if I form an umbrella LLC in 2023 would I need to form another LLC for my online reselling website right away? 3) can i covert a LLC to a umbrella LLC ? Thanks for your advice.

[@ElizabethPW]

You would add one LLC into being owned by another (the umbrella) by transferring ownership just like you transferred it to another human person -- the LLC would sign the operating agreement and be added to any state filings (like annual report, statement of information, etc) as the owner on record. You can always change an LLC to be an umbrella or holding -- it's not really a type of LLC legally, it is just what you are doing with it.

[@eddingtonrental8861]

Hi, thanks so much for your content!!! I've watched several of your videos. I can't find where you said it but i thought in one of your videos you stated we may only need a will and not full estate planning. I have a couple houses, some 401K plans, and maybe a few collectibles. I've leaving it all to my sister. I may say a percentage goes to a few other people and my collectibles go to an organization. Should I pay $1500 for an estate plan? It seems like a lot of money for little to no reason.

[@ElizabethPW]

Well the short answer is that if you need tax planning then you definitely need an estate plan. A trust is also great for if you became incapacitated in your old age (then someone can take over, in a fairly straightforward way). All this really depends on the exact situation - not just the money but also the family dynamics.

[@tarat7943]

Hi, what if it’s a record label and tv production company? Both are high risk but similar industry. Would that work?

[@ElizabethPW]

As long as you are comfortable with them both being liable for the other

[@albadumelle6617]

Hello My partner and I are at the beginning of starting our LLC company. We want to add multiple businesses under it. Spiritual healing Boutique and Bakery. I'm taking on the cookie bakery side, and I was wondering if it would be best for the cookie Bakery to have its own LLC? We wanted to keep all under the same LLC for the sake of building the business together, we enjoy working together and the business name. Thank you

[@ElizabethPW]

It could be more simple to have under the same LLC, but then each business is liable for the other, and if one of them is sold, you have to split them apart at that time

[@fordshav]

Hi Elizabeth, thank you for this video. If you had an umbrella LLC would you need an EIN per LLC?

[@ElizabethPW]

Right if you have multiple LLCs, with on as an umbrella, you'd have an EIN for each. You might though have the taxes pass through to the umbrella -- I recommend speaking to a tax person or accountant about the forms to file and how to set that up on the tax side of things.

[@RobinTaylorMusic]

I searched the California business entity name database and there is a business with the exact same LLC name as I wanted. They are in real estate and my business is investments (stock market). Could I register my business with the name that I wanted since we are in different sectors of business (my business would not be real estate as theirs is) or can I not use the name at all even if I'm doing business in a different sector?

[@ElizabethPW]

You can't register your LLC name if it is exactly the same as another in California (even if totally different business sectors). But you can just change it a bit. Like if someone had "Potts Weinstein LLC" already, I could register "Potts Weinstein International LLC" in California. It's a different rule than trademark law (where the sector is important).

[@fantabarack]

Is there any legal obligation if I want to create an umbrella LLC and start several projects under it, like 3 ecomm sites with different names? Mentioning Operated/owned by xyz llc. on the site is enough? I don't want to get 3 different DBA for - experimental projects. Thank you. Keep it up, very valuable videos!

[@ElizabethPW]

Right I’d be fine with someone simply using the LLC name on the site - put in the footer so on every page, put in about section, terms of service, etc

[@andrew-isac]

Elizabeth thank you for your wonderful channel and advice, i ve a Q, in description of llc while creating it ( what description i should write if i want to have umbrella llc without specifying specific activity of business to make it wide, & is it ok ? Or would that affect banking later on or so based on you experience when trying to open acc later

[@ElizabethPW]

Hm I'd just put "holding company" or similar

[@andrew-isac]

@@ElizabethPW regarding business category if the holding company what should people typivally choose in such case as the Naics/ sic ?

[@shannarucker4434]

Would real estate, a laundromat, and swim wear company work in this umbrella situation?

[@ElizabethPW]

You could do that, but since those businesses are all very different and all have different risks, you'd need to think about whether it makes sense. Real estate has physical assets, the laundromat has assets and public on the premises, and the swim wear has inventory. In a perfect world you'd put each in their own LLC (to protect them from each other) and then those three could be owned by one umbrella LLC (and pass through the income for tax purposes). But obviously that would get expensive!

[@juliamarchenko7584]

Thank you for the video! I have a theoretical question on selling one of the companies. Umbrella LLC is a parent company in this case, correct? What happens to subsidiaries when a parent company is sold or just subsidiaries can be sold? Can a seller keep a control over one or more subsidiaries? Thank you again!

[@ElizabethPW]

The default would probably be to sell a parent with all of the subsidiaries, but you could negotiate something different, where you keep one or more of them. That's one nice aspect of having something split up into subs, it is easier to separate them.

[@juliamarchenko7584]

@@ElizabethPW Thank you!

[@urielaquanis4216]

Amazing insight 🙏 Also quick question, if my Umbrella Holding company is taxed as an s corp, does that mean my subsidiary flows through for tax purposes? Thank you

[@ElizabethPW]

Yes you can set it up that way - here's an article about it www.upcounsel.com/s-corp-subsidiary

[@lxc3909]

Great video! I was thinking of setting up a (parent) holding co. with a (child) operating co.; but, I came across the concept of an IPHC, which is actually a child of the (main) holding co., too, just for holding IP. I will have several trademarks and a few patents within a year or so. Is there a liability reason to structure that way, or is that purely a tax-driven setup (for IP licensing, royalties, etc.)? In other words, is there liability risk in having a single holding co. hold the IP and license it to my single operating co., which it owns?

[@ElizabethPW]

Hm yes it is primarily for tax planning. I guess there is liability for each IP to be liable for the other IP, but that would also be true if the business owned the IP outright

[@fward6725]

Hi! So what if the owners are spouses? Do we need each business to be LLC? Or is it possible for us to have our Airbnb, car rentals, and consulting under the umbrella?

[@ElizabethPW]

I recommend approaching it as if you were not married, as if you were just business partners, when setting up the legalities of the business. Then you'd look at whether it makes sense to have the businesses be separate. For real estate and car rentals, they have a lot of assets and risks that are unique, so having them in separate LLCs can make sense. For the tax side, it may make sense to have all of them be owned by an umbrella, since you are married (and if you file joint) but I'd check with a tax expert.

[@fward6725]

@@ElizabethPW Thank you Elizabeth! This is really helpful.

[@keithbolden4810]

This may be a silly question, what state do you represent? Thank You

[@ElizabethPW]

I am in California

[@candacehood9864]

Hi! I was wondering if a holding company would work in this situation...Let's say I am a real estate agent and that is the current and only LLC at the moment. I acquire properties for rentals which may need another LLC (or can they go under the first LLC)? Then I have a passion for doing something completely different like a competition canine handler service. Would I need 3 LLCs? I would be the only person in the business initially for all and I am in the state of GA. I know each state will have their quirks but I just wanted your opinion about this. Thank you!

[@ElizabethPW]

Could you put those all in the same LLC? Yep. The only issue is that they are all liable for each other. So, if the canine handler business got sued, the real estate properties would be on the line in the lawsuit. I'd want to separate large assets like that from the other businesses and their liabilities.

[@candacehood9864]

@@ElizabethPW thank you! Makes sense to me as I was leaning towards separating them. 😊

[@candacehood9864]

@@ElizabethPW I was thinking the properties and maybe the commissions could be in the same LLC (since they are real estate related) and the Canine Handler business in its own LLC.

[@ElizabethPW]

Makes sense!

[@candacehood9864]

@@ElizabethPW 😊