Can an LLC Own Another LLC?

Your business name plays a monumental role in how your company is perceived. It’s the first thing your clients interact with, and getting it right is essential for branding success. As such, there are a number of good reasons that can prompt you to change your LLC name.  Sometimes a business name just needs to be modified to become more unique. Other times, the departure of a business partner or changes in the branding strategy may require adjustments. Every business evolves, and if you start experiencing an identity crisis, it’s only logical to consider a business name change. How to change the name of your LLC? Changing a business name can be frustrating, especially if you aren’t familiar with the procedure. For starters, bear in mind that if you have partners, you’ll need their written consent to make any name changes.  Each state has its own rules and regulations when it comes to LLC names. The process of changing your business name can be a little more complicated if your business operates in more than one state. Naturally, changing an LLC name will cost more if you do business in multiple states.  We created a step-by-step guide that thoroughly explains everything you need to know to complete your business name change. Of course, if this is something that you aren’t ready to do on your own yet, there is no shortage of legal services that can help you change your business name. Check available LLC names If you’re trying to figure out how to change your LLC name, the first step involves checking whether your new name is available in the state where your business operates. Business filing agencies allow you to conduct a search on their websites for free, but you can get the same information from the secretary of the state’s website.  It’s important to complete this step correctly and select a name that the state will approve. You cannot choose names that are similar to other LLCs. It’s also important to remember that your requested name can still be claimed by third parties until it’s officially approved and filed with the state. Approve a resolution to change the name of your LLC The next step is to get a written resolution that shows that all owners and members of your LLC agree with the name change. Each business should have an LLC operating agreement, a document that outlines how important decisions are made in the company. In some companies that process only involves two people, while others require all members to vote. Either way, having a proper operating agreement can speed up the entire process. This is also one of the main downsides of an LLC, as it requires strict rules on who makes decisions. In case you don’t have an operating agreement, you can draw up an informal one with other LLC members. Just make sure that you meet the LLC name requirements that vary from one state to another. Amend the name in your articles of organization After you get written approval to change your business name, you’ll need to amend your articles of organization. This is the longest step of the entire process, and you usually need to wait up to 30 days for the state to make the changes. It’s also referred to as articles of amendment or certificate of change. Each state has its own forms on how to change the name of an LLC.  You can easily download the forms on your computer and file them. The filing fees depend on your state of incorporation. Change your business name in your operating agreement The state will inform you about your approved name change by mail. Your registered agent can receive this document on your behalf and inform you when the mail arrives. You’ll then need to make updates to your operating agreement to reflect the name change. IRS LLC name change One of the most important things you need to do after you change your business name is inform the IRS about it. It’s a standard procedure requiring you to file a proper form. There are several options for paying taxes depending on whether you’re a single member, co-owner, or pay taxes as a corporation. You can read our guide on how to pay taxes with an LLC and find out everything you need to know. Inform Licensing agencies If you operate a business that requires state or federal licenses, you’ll need to inform the relevant agencies about the name change. Some of these agencies may require you to produce a certified document from the state authorizing the name change.   Change the name of an LLC on your business accounts Once the name change is finalized, you’ll need to update all your accounts, contracts, invoices, and leases. You’ll also need to contact your bank and order new credit cards and checks if your company uses them.  The business name must be updated on all your official documents. For instance, you need to change it on all the contracts with your clients and suppliers. Update the name on all other documents The formal part of the LLC name change is completed once you inform your bank and vendors, but then you need to change the name everywhere else. First off, make sure that your website is updated with the latest information. Perhaps you’ll need to change your email address if it contains the old name. You’ll also need to print new business cards, brochures, and any other promotional material you show to your clients.  How can you change the name of your LLC without changing the entity’s legal name? If changing the entity’s legal name seems too complicated or isn’t necessarily the right fit for your business, you can always choose the easier option of filing for a DBA or “doing business as.” This allows you to run your business under any name you want while keeping your legal name unchanged. A DBA is also known as a fictitious name. In some states, business owners are required to have a fictitious name so the state can protect consumers from illegal businesses. Aside from that, a DBA is commonly used for marketing purposes, allowing LLC owners to use another name for promoting their business. How much does it cost to change the LLC name? The costs of changing your business name vary from state to state. Most charge a filing fee to process your application, which typically ranges between $20 and $150. The costs can be higher for those who have LLCs that operate in several states. Bottom line It’s perfectly legal to change the name of your business, and if you follow our short guide, the entire process is straightforward and entirely manageable. But sometimes, changing the name of an LLC is not the best option for business owners. If you aren’t absolutely sure that a name change is necessary, you can file for a DBA instead. This will allow you to operate under a fictitious name while keeping your original LLC name. The DBA filing process generally involves nothing more than a small fee and a simple form.

“LLC” is a term you may often see as part of a company’s official name. But have you ever wondered what exactly it stands for? The abbreviation LLC, along with its synonyms such as L.L.C., LC, L.C., limited company, limited liability co., and Ltd. liability company, indicates that a business is formed as a limited liability company rather than a sole proprietorship, partnership, corporation, or any other type of company. If you’re on the hunt for the most suitable business structure for your newly established company or growing sole proprietorship and need answers to questions like what does LLC mean for a business and how does it work, keep reading this article.Understanding the Concept of Limited Liability CompaniesAn LLC is a type of business entity you can form by filing the necessary paperwork in the state where you intend to conduct your business. The regulations surrounding limited liability companies may vary slightly from state to state. Owners of an LLC are generally called members. An LLC can have just one owner (a single-member LLC) or many owners (a multiple-member LLC). While there are no differences in how single-member and multiple-member limited liability companies run their business, there is a difference in how these two LLC types are taxed. States impose few restrictions when it comes to LLC ownership. Members can be individuals, corporations, other LLCs, and even foreign individuals and business entities, making it an extremely flexible option regardless of your circumstances.However, depending on the nature of your business, you may not be able to start an LLC. For example, an entity such as a bank or an insurance firm generally cannot be structured as a limited liability company. Despite these restrictions, though, the LLC is America’s fastest-growing business designation type, with more than 2.4 million US businesses identifying themselves as limited liability companies nowadays.So, what is it that makes the concept of an LLC so appealing to American entrepreneurs? Not only is this business structure easy to set up, but also it provides a high level of flexibility and protection to its owners (members). In many cases, opting for an LCC represents the best of both worlds.A limited liability company, by definition, protects its owners from being held personally liable for the company’s debts. In other words, if a creditor goes after the LLC’s assets, members may lose the money they invested in the company, but their personal assets - such as real estate, vehicles, bank accounts, heirlooms, and investments - won’t be at risk. However, if the company fails to meet legal and reporting requirements or fraud is detected, the corporate veil protecting the members may be lifted, allowing the creditors to go after them. Another reason why many entrepreneurs opt for setting up an LLC is that this business type can choose not to pay federal taxes. Thanks to flow-through or pass-through taxation benefits, the profits and losses of an LLC can be passed through to members and listed on their individual tax returns. Alternatively, an LLC can choose a different classification and be taxed as a corporation. Let’s take a look at some of the most apparent differences and similarities LLCs share with corporations and partnerships, the two business structure types limited liability companies are often confused with.LLC vs. CorporationThe main difference between a limited liability company and a corporation is that corporations are owned by their shareholders, while an LLC is owned by one or more individuals or business entities. An LLC structure is governed by a written or oral operating agreement that identifies the way the company will be run, the way profits will be shared, and the roles of the members. However, limited liability companies are very flexible when it comes to the specifics of these agreements. On the contrary, corporations have a much more rigid structure of directors, officers, and shareholders.As far as maintenance goes, corporations need to organize annual shareholder meetings to maintain their status. On the other hand, LLCs aren’t required to hold annual meetings, keep minutes, or even have a board of directors.Taxation flexibility is among the main reasons why entrepreneurs choose to set up an LLC. Corporations pay corporate income tax on profits and their shareholders also pay income taxes on the profits they receive as dividends (C corps). In some cases, corporations may qualify to avoid double taxation by passing through the profits to shareholders’ personal tax returns (S corps). In contrast, limited liability companies are pass-through entities by default. However, their full range of taxation options includes the models of a sole proprietorship, partnership, S corporation, or C corporation.Creating an LLC or a corporation lets you make the most of liability protection from the company’s obligations. While both business entity types offer the limited liability feature, corporations are favored by businesses that intend to seek outside investment, while an LLC is a smart choice for startups and small, owner-managed companies that need flexibility and want to avoid excessive corporate formality. LLC vs. PartnershipWhen two or more people decide to go into business together, they don’t need to file any paperwork to officially form a business entity - the partnership is created automatically. On the contrary, forming an LLC requires filing articles of organization with the state the company plans to do business in and complying with any additional state filing rules. In addition to these formation disparities, partnerships and LLCs also differ when it comes to personal liability. While corporations and limited liability companies offer liability protection from the business’s creditors to their shareholders/members, partnerships and sole proprietorships do not. In other words, partners can lose their personal assets if their company gets sued or falls into debt. So, is an LLC similar to a partnership in any way? Yes, it is. Both limited liability companies and partnerships offer the benefits of pass-through taxation, which means that there are no corporate taxes to worry about, as business owners report the company’s profits and losses on their individual tax returns. Moreover, as far as tax benefits go, both LLCs and partnerships qualify for the 20% pass-through deduction according to the Tax Cuts and Jobs Act.Forming an LLCShould you decide to form an LLC after comparing this business structure with corporations and partnerships, note that you’ll be presented with two options; you can either form an LLC yourself or hire an LLC service company to help you with the procedure. Additionally, you can also consult with a lawyer or an online legal service company if you need help with any legal matters. No matter which approach you decide to opt for, you’ll need to take a few simple steps: Choose your state of formation. This can be the state you live, but it must be the state you intend to conduct the business in.  Pick a name for your business. Your LLC’s name must be unique in your state. We’ve already answered the question “what does LLC mean?” However, now we need to add that this abbreviation or any of its variations must form a part of your company’s formal name.  Appoint a registered agent. A registered agent or an agent for service of process is a person or company that deals with all official correspondence such as legal summons and document filings for your company. File your LLC with the state. To officially create your limited liability company, you’ll need to file your formation document (usually referred to as articles of organization) with your Secretary of State’s office. Create an LLC operating agreement. Although this step isn’t officially required by most states, we still suggest you create an operating agreement for your LLC. This document can either be written or oral, and its main purpose is to outline the member roles and ownership structure of your company. Get an EIN. After completing your formal LLC creation, you’ll need to apply for an Employer Identification Number if you want to open a business bank account and hire employees.

Not all businesses are built to last, and, occasionally, the time comes to close your LLC. If you were excited about starting it, this could be a stressful moment, but there are also those looking forward to ending things, as it can be the lesser of two evils. Whatever the case may be, terminating a company requires some know-how. Luckily, if you were worried about how to dissolve an LLC, we’re here to go through the process with you and discuss the steps you need to take. Several factors affect this process, including the laws of the state your company was registered and operated in, the number of LLC members, and whether there is an LLC Operating Agreement in place. Ultimately, there are different kinds of dissolutions for different kinds of LLCs, so you need to discern which category yours is in and what is required to complete the process. Why Would You Need To Dissolve an LLC? “Forgetting” to do so is, unfortunately, a common solution, especially for small businesses without employees or companies that were never actually used. This is certainly the path of least resistance in the short-term, but ending things properly has its benefits. For one, you won’t be surprised by a fine from a government agency or, even worse, a lawsuit for unpaid debt. As an LLC owner, you are legally required to file annual reports, pay yearly fees, and minimum taxes. These will stack up, along with their late fees, until you take the necessary steps to dissolve an LLC. Step 1: Voting on Dissolution If you are the sole member of your LLC, then you skip this altogether. However, if you’re not the only founder, all LLC members must vote on dissolution before any action is taken. This is also where an LLC Operating Agreement could come in handy - provided you created one when establishing your LLC - as it usually sets the rules for voting on dissolution. Step 2: Filing for Dissolution This step could either come second or last, depending on your state’s rules. Nevertheless, you need to file the necessary papers, usually the Articles of Dissolution, with the relevant authority. It is usually the same place where you filed the papers to open your LLC in the first place, most likely the Secretary of State. Keep in mind that these procedures and their accompanying fees vary between states, particularly if your LLC operated in more than one. While checking everything might sound troublesome, it’s a lot less so than the potential tax issues you might be ending up with otherwise. Step 3: Filing for a Final Tax Return Wondering how to dissolve an LLC with the IRS? Closing your company means you have to check in with the Internal Revenue Service (IRS), and your first order of business is filing a final tax return for your LLC. For example, if you have employees, you must pay out their final wages and compensations, if any are owed. In addition, you have to make final federal tax deposits, report employment taxes, and all payments to contract owners exceeding $600. Once you pay the taxes you owe, the last step is to cancel your EIN business number and close your IRS business account. To avoid any confusion, you can always check the IRS’s business closing checklist. Step 4: Notify Your Creditors Some guides on how to dissolve an LLC suggest this as the first step, simply because it is good business practice. In truth, it is entirely up to you when you’ll do it, so long as you get it done. Notifying your creditors will help you keep all your finances in check. However, the rules here also differ according to state: You might be eligible for claims from companies you’ve never worked with. Some states require you to put up a notice within your local newspaper, too. Still, whatever the state-specific rules, you must notify your creditors when dissolving an LLC. The memo you send should contain: A notice that your LLC has been dissolved or is in the process of dissolution The deadline for submitting their claims, the information they should include in them, as well as the mailing address to send them to A statement barring claims not received by the deadline Step 5: Dividing the Assets The last step on our list does not apply to all LLCs, but it’s crucial when there are two or more LLC members. LLC assets are typically distributed depending on the percentage of ownership.