Why Owning Multiple Businesses Is Hard Work

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An attorney may advise you to open more than one company for maximum legal protection, but you need to know what happens after you make that decision.

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You can expect to encounter the following compliance issues whether you own more than one business, a holding company, or umbrella corporation:
  1. Incorporation renewals. If the businesses are incorporated, then you'll owe a renewal fee in each state where you registered the company. The extra costs also apply to any county or city registration fees and permit expenses.
  2. Annual income tax returns. Each additional business will increase the tax preparation fees associated with your file. If it's a partnership, S-Corp or C-Corp, then you'll have the expense of an entirely separate tax return.
  3. Bookkeeping files. You now must maintain individual accounting records for each entity which means you need to open a new file to separate the activities, not to mention the extra time to complete all the bookkeeping tasks.
  4. Sales tax returns. If your business activity triggers sales tax returns, you need to add up the cost of preparing the paperwork for each business and state where it applies. Depending on the sales revenue, you could owe a sales tax return on a monthly, quarterly or annual basis.
To learn what you should know before you open a new business or side gig, it's best to speak with both an accountant and an attorney.


DISCLAIMER: Please consult with your accountant, attorney and financial advisor before implementing any tips displayed on this website. DIY research does not replace the advice of a licensed professional who has thoroughly reviewed your file.