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If you are considering operating multiple businesses, you must meet some essential legal and personal obligations. This article will outline some of these considerations, including:

  • the way that you structure your businesses;
  • how you can blend your businesses to make them run more smoothly;
  • making sure you pay your taxes correctly; and
  • putting in place organisational systems to ensure that you can run multiple businesses. 

Structure Your Multiple Businesses Wisely

If you are an entrepreneur who owns a business and wants to start or purchase a second business, you will need to consider the effect that this may have on how you structure your business. There are three ways you can do this. 

1. Creating Separate Companies

You can create separate companies for each business you want to run. You can register each business as a limited liability company (also known as an LLC). Technically, you can create an unlimited number of individual companies and be the director of multiple companies. Still, you will need to be careful not to create a conflict of interest. 

The benefit of creating separate companies is that each company is a separate entity, so they will not be liable for the finances of the other. Additionally, registering each business as a company means that you will not be liable for the debts of all of the companies that you run. However, it can be costly and time-consuming to set up and maintain compliance for several companies. 

2. Setting Up a Corporation

You can set up a corporation that will allow you to hold the different companies under one larger structure. You can set up an initial company with the individual companies underneath it, each with its own ‘doing business as’ labels. This allows you to save time and money as you only have to register one company. 

3. Using a Holding Company

You can create a holding company, which will allow you to create separate companies or corporations for each business and hold them under a wider company. This will enable you to assume more companies into your fold easily. However, setting up a holding company can be complicated and expensive. 

Blend Your Multiple Businesses

It would help if you took the time to consider how your businesses may be able to work together to save you time and money. For example, you can use one payroll system for all of your companies to save time. Further, you could use the same employment agreements, human resources, or administrative staff for all of your businesses. You could even run your companies out of the same location to save money on leases. 

Suppose your businesses are complementary in their focus. In that case, you can create a strategy for them to work together, which will overall save more time and money than if you had two businesses achieving two separate goals. Therefore, it is good to acquire or run two companies that are not so utterly different that they could never work together.

However, you should make sure that you are not moving assets or finances between your companies in a way that breaches company law. 

Take Care of Your Taxes

When you are operating multiple companies, your income tax obligations will change. Your tax requirements will be highly dependent on: 

  • the role that you have within your company; and 
  • how the different businesses are structured. 

Consult an accountant to ensure that you are paying your taxes correctly. 

Make Sure You Are Prepared and Organised

If you want to run multiple businesses successfully,  ensure that you can stay on top of what is going on in every business. You do not want to burn yourself out or make mistakes that will result in legal issues. Make sure that you create a comprehensive business plan to ensure that the trajectory of your companies stays on track and you can plan out any joint business ventures in advance. If you simply continue to operate your businesses separately or do not bring on extra staff to assist you, you likely will be unable to manage multiple companies successfully. 

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Key Takeaways

While running multiple businesses can be highly challenging, it can also be rewarding and strengthen your overall business repertoire. However, you need to make sure that you:

  • correctly structure your company portfolio;
  • pay your taxes correctly;
  • blend your businesses in an effective way; and
  • ensure that you personally can run multiple companies at the same time. 

If you need help with operating multiple businesses, our experienced business structuring lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 0800 005 570 or visit our membership page.

Frequently Asked Questions

How do I start a holding company?

It is challenging to start a holding company. However, you can start the process by registering your company with the Companies Office.

Is it easy to run multiple businesses at one time?

No! It is extremely challenging to run one business, let alone two. However, there are things that you can do to make it easier, including staying organised and blending businesses together for better functionality.

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