2 LLC's under the same Federal Number?

[Barb]

I have a business that wants to open a branch in another location in the same State and asked me if they have to have separate ID #s and separate bank accounts. Can anyone help me with this?

I use QB and will Class each one to keep everything separate, but not sure on doing the tax return and W-2s. This will be a Sole LLC for both locations. They are thinking that by being separate LLC's it will protect them from suits against the other location.

Thanks
Barb

[BOB W]

If they want separation of liability they have to get a second LLC> Different name/different Fed ID#.

What is usually done in regards to "name" is Joe's Plumbing at Oakdale, LLC for the second LLC. This would be the same name as the 1st LLC but the "at Oakdale" is added to the name.

Insurance/Workmans comp can be covered under the same policies (ET AL).

[Barb]

2 LLCs

Thanks Bob, here are few other questions.

1. Can they run both LLC's from the same Checking account
2. Issue one W2 from the 1st location, of course it will have local taxes from the other location.
3. File on 1 or 2 Sch C.?
4. We are in KY so KY has the LLC tax form, and I assume it will have to have 2 since there will be 2 ID #s.

I think that is all for right now. I've never done one of these before. Thanks a bunch for your help.

[BOB W]

Thanks Bob, here are few other questions.

1. Can they run both LLC's from the same Checking account
2. Issue one W2 from the 1st location, of course it will have local taxes from the other location.
3. File on 1 or 2 Sch C.?
4. We are in KY so KY has the LLC tax form, and I assume it will have to have 2 since there will be 2 ID #s.

I think that is all for right now. I've never done one of these before. Thanks a bunch for your help.

1. Can they run both LLC's from the same Checking account>>>> NO.

2. Issue one W2 from the 1st location, of course it will have local taxes from the other location.>>> NO, SEPARATE ENTITY MEANS SEPARATE RECORDKEEPING AND W-2S.

3. File on 1 or 2 Sch C.? >>>> TWO SCHEDULE C"S >>> SCHEDULE C DOES NOT ALLOW CONSOLIDATED REPORTING.

4. We are in KY so KY has the LLC tax form, and I assume it will have to have 2 since there will be 2 ID #s. >>>> THAT IS CORRECT.

[Barb]

2 LLCs

Thanks again.

If they do this as a S-Corp, with a branch store, can it be done all out of one check book? I told my client I didn't think so, but wanted to double check.

[BOB W]

When you co-mingle funds you will lose your limited liability from one entity to the second entity. Your original question talked about isolating liability so that one operation does not cause problems against the other operation.

It does not matter if it is an LLC or S Corp, it is all the same issue.

Suppose you have a SCorp or an LLC where the shareholders or members continue to use that entity as their personal checking account along with their business income and expenses. Even the most inexperianced lawyer would know that operating as limited liability entity it would lose that protection because it did not operate according to its charter. Any entity that co-mingles monies with an autherized LLC or SCorp did not operate as LLC or SCorp.

[Barb]

2 Llc

Ok, I think I have it straight now. In order for them to have the limited liability issue they must operate completely separate, just like to separate businesses. Now, If they do this as a Sole Prop. then they could keep it all under one account or not?

How do big businesses like Walgreens that have so many branches do it. I have seen W-2s where the employee has worked in all different locations? This is getting more and more confusing.

My client is real concerned with the issue of paying the expenses. She doesn't want to track 2 different checking accounts for buying her supplies, etc.

I really appreciate your help.

[Nashville]

Walgreen's

Barb, Walgreen's and other chain stores may have a central disbursement account which covers many stores, however, Walgreen's does not enjoy liability that is limited to a single store only. I believe the upside/downside is limited liability versus centralization.

You might do a search on "Delaware Series LLC's" to read up on this. They are not accepted in all states, but the concept is spreading rapidly.

[Burke]

What we have here, obviously, is a failure to communicate. Bob W gave good advice. Take it, or forget the 2 separate entities.

[BOB W]

As a single entity operating with a branch operation, there is another choice, it is to get a large liability policy for all the stores and hope that it is large enough to cover any future problems. The downside is > NO SUPPLIER PROTECTION if the branch goes belly-up.

[Barb]

2 Llc

Thanks will do. You were very helpful,

[Lion]

Legal vs. Tax

Client has to decide what legal entity they must have for their own comfort level. You can help them understand the tax implications of that decision, so they have the full picture before they decide. But, once they decide they want the two locations to be two separate entities for their own legal protection, then they have to keep the two locations separate for tax and financial purposes also. But, if they are comfortable with two locations in the same business and a good insurance policy, then they can have one set of books or one with "classes" or however they want to simplify their finances. What type of business is it? What types of legal liability issues are they trying to prevent? Have they discussed them with their insurance agent as well as their lawyer and you?

[Barb]

2 Llc

Lion,

Thanks for your advice. They have a pizza restaurant and at buying another a few miles away from the first and they are concerned with someone sueing them at either place for such things are getting sick on their food, or falling, etc.

I told them to discuss this with the lawyer and their insurance agent and get back to me on what they say.

For accounting and tax purposes, could they set up a S-Corp and do all business out of one Corporate Business checking account and at the end of the year allocate the income & expenses based on the percentage of income to each location? But I guess that doesn't separate the liability issue, does it?

[thomtax]

Lion,


For accounting and tax purposes, could they set up a S-Corp and do all business out of one Corporate Business checking account and at the end of the year allocate the income & expenses based on the percentage of income to each location? But I guess that doesn't separate the liability issue, does it?

Assuming there are no local issues, they would not have to wait until the end of the year to allocate income & expenses. Most corporations of any size have departments within the business that they keep up with separately, and that is basically what you have here - two departments of the same company. This does not touch upon the liability, etc., but you can keep as many departments as you wish and just combine at the end of the year. If there are any transfers between the two places, there will be considerations there.

LT

[BOB W]

Lion,

Thanks for your advice. They have a pizza restaurant and at buying another a few miles away from the first and they are concerned with someone sueing them at either place for such things are getting sick on their food, or falling, etc.

I told them to discuss this with the lawyer and their insurance agent and get back to me on what they say.

For accounting and tax purposes, could they set up a S-Corp and do all business out of one Corporate Business checking account and at the end of the year allocate the income & expenses based on the percentage of income to each location? But I guess that doesn't separate the liability issue, does it?

Barb> it doesn't matter if they operate under an LLC (SMLLC>Schedule C) or an SCorp. All the issues are the same.