Multi-Entity Business Structures
Multi-entity business structures can provide flexibility and options for growth, but they can also add complexity.
At Bright Hill Advisors (BHA), we don’t automatically recommend complicated structures – we’ve seen too many half-baked ideas that create illusion of precision but don’t hold up legally.
However, proper multi-entity planning with robust operating agreements can provide benefits. Here are some common arrangements we advise on:
Holding Company and Operating Company
- Your operating company leases space, equipment etc. from a separate holding company LLC. This can reduce self-employment tax and allow for flexible future growth.
Parent-Child Business Structures
- A holding LLC owns multiple operating LLCs as subsidiaries. Allows combining different businesses like realty and consulting under one parent S-Corp.
Fee For Service Arrangements
- S-Corps own separate service businesses. Multi-member LLC contracts with S-Corps for services, allowing flexible profit-sharing. Works nationwide except…
Fee for Service in California
- CA’s high LLC fees based on gross receipts makes this arrangement expensive. We can advise on modifications.
Before setting up multi-entity structures, important to review considerations like insurance, licensing, 401ks.
Complex but powerful when done right! Let BHA advise you through the possibilities.
Please reach out with any questions.
We offer free 15-minute consultations to review business needs.