When you own two or more businesses it often isa good idea to form a management company as a C Corp and then create LLC shells for each of the "subs."

QUESTION.
I have recently formed an S Corp for a bricks and mortor company. I am considering starting an unrelated online business. I will be the only owner of each. How do I go about seting up two companies? Yummies inc. owns Taco Bell, Pizza Hut, and a few others. Would do you think about having a parent company. Basically how do I own more than one company?

ANSWER.
I don't recommend anybody form S Corps today. Either you form a C Corp or you form a limited liability company (LLC). But you've already got an S corp. Oops! You may want to stack your businesses and have a parent company. I recommend you convert your S corp to a C corp which would be a management company with you collecting a W-2 from it. All your healthcare expenses would be fully deductible from the C corp and you would generate revenues for the corp by charging management fees to your two businesses (clothing line and online catering service). You would need to form two LLCs - one for each of the businesses. The LLCs would be owned by the corporation - not by you directly. That way all revenues and expenses of your business ventures would be run through your corporation's tax return at year end. That will help insulate you from getting picked by the IRS for an audit. If your salary from the corporation is not high enough to zero out the corporation's income, then you will need to give yourself a bonus at year-end so the corporation has no taxable income. Consider taking a look at Structuring Your Business (ISBN: 1593371772) by Michelle Cagan. See my book review for it at Amazon. I think I have answered your question. Good luck! Regards, -Jeff

Jeff Lippincott
SCORE.org Counselor
Princeton, NJ
scoreprinceton @ aol.com
http://www.scoreprinceton.org/
http://www.jlippin.com/