Can you have multiple LLCs? The bookkeeping

Can you have multiple LLCs? Yes, and the formation part is the easy part. A state will let you file as many sets of articles as you can pay for. What owners find out later is that every LLC they form is a separate set of books: its own bank account, its own reconciliations, its own year-end, and a record in two files every time money moves between them.

This post follows one owner with three LLCs through what that means in practice. Northside Properties LLC owns a building. Northside Coffee LLC rents space in it and runs the shop. Northside Roastery LLC was formed last spring for a wholesale roasting business that has not started yet. The legal reasons to split a business into several LLCs, or not, belong with an attorney. The bookkeeping consequences are below.

What each LLC needs on its own

Each LLC is its own legal entity under state law, so most of what one company needs, every company needs. What changes from one LLC to the next is the federal tax return, because that depends on how each one is classified.

Item	Needed for each LLC?	Detail
Formation filing and annual report	Yes	Set by the state where it is formed and each state where it registers to do business; fees and due dates vary
Registered agent	Yes	One in each state where the LLC is formed or registered
Business bank account	In practice, yes	Not a federal rule, but mixing two LLCs’ money in one account erases the line between them in the books
Its own books	Yes	One QuickBooks Online company per LLC, reconciled every month
EIN	Not always	Required for an LLC with employees or certain excise taxes; see the EIN section below
Federal income tax return	Depends on classification	A single-member LLC files nothing of its own by default; a multi-member LLC files Form 1065; an LLC that elected corporate status files Form 1120 or 1120-S

The return row is the one owners get wrong in both directions. By default, a domestic LLC with one member is disregarded for federal income tax and one with two or more members is a partnership (Treas. Reg. §301.7701-3(b)(1)), unless it files Form 8832 or an S corporation election. The IRS single-member LLC page says that when the owner is an individual, a disregarded LLC’s activities generally go on Schedule C, E or F of the owner’s Form 1040. So two single-member LLCs owned by one person can both land on one personal return, on two separate schedules, while still needing two separate sets of books.

Is it better to have multiple LLCs or just one?

That is a liability and tax question for your attorney and tax preparer, and it turns on how risky each business is, what each state charges and how each company is taxed. What we can describe is what each choice does to the books.

	One LLC, several businesses	One LLC per business
QuickBooks Online files	1	1 per LLC
How the businesses are separated	Classes or locations on each transaction	Separate companies, separate files
Balance sheet	One, shared by every business	One per LLC
Bank reconciliations	Every account in one file	Each file reconciles only its own accounts
Money between businesses	Internal; often no entry needed at all	Recorded in both files, every time
Federal return	One for the LLC	One per LLC, unless disregarded into the owner’s return
QuickBooks plan	Plus or Advanced, for class tracking	Any plan, one subscription per company

Northside’s three LLCs need three files. If the same owner had put the shop and the roastery into one LLC, it would be one file with a class for each, and the transfers between the shop and the roastery would mostly disappear from the books, because there would be no second company to owe anything.

Can I have 3 businesses under one LLC?

Yes. One LLC can run several lines of business, and its books stay in one QuickBooks Online file. Intuit’s class tracking splits the profit and loss by business, and it is available on the Plus and Advanced plans. Classes do not split the balance sheet: the cash, the debts and the equity of all three businesses are one set of numbers, because legally they are one company’s.

Is it better to have multiple LLCs or DBAs?

A DBA (“doing business as”) is a trade name, not a company. An LLC that runs two shops under two DBAs is still one LLC with one set of books, one federal return and one EIN if it has one. For the books, treat each DBA like a business inside one LLC: a class for each, and, if you like, a separate bank account for each, all inside the same QuickBooks Online file. What a DBA does not give you is a second company, so there is nothing to record between them.

One QuickBooks Online file for each LLC

Each LLC gets its own QuickBooks Online company. Intuit’s article on adding another company is plain about what that means: “Each company you create requires its own separate paid subscription,” and “Bank and credit card accounts connected to one company are not visible in another.” You can sign in once and switch between companies, and you can move the chart of accounts, vendors and customers into a new company to start it faster.

The shortcut that causes the most cleanup is one file with a class for each LLC. It looks tidy on the profit and loss. The problem is everything else:

• One balance sheet for several companies. Each LLC’s cash, loans and equity are mixed into one set of totals, and a lender or a buyer asking for one company’s balance sheet gets a number nobody can defend.
• Transfers vanish. When the coffee shop pays the property company’s bill, nothing records that one company now owes the other, because inside one file they are not two companies.
• The returns cannot be prepared from it. A multi-member LLC or an LLC that elected S corporation status files its own return, from that company’s own numbers. A preparer working from a shared file has to rebuild that LLC’s books first.

The one exception is an LLC with no bank account and no activity of its own. Even then, it is safer to give it a small file of its own than to carry its balances as a class in another company’s books.

Moving money between your LLCs

Every dollar that moves from one of your LLCs to another is recorded twice: once in the file it leaves and once in the file it reaches, on the same date, for the same amount. What the entry looks like depends on why the money moved.

Why the money moved	In the company it leaves	In the company it reaches
Rent or a fee for real work	Expense	Income
A loan, with a note	Loan to the other company (asset)	Loan from the other company (liability)
One company paid the other’s bill	Due from the other company (asset)	Due to the other company (liability)
Profit passed through you	Owner distribution	Owner contribution

In October, Northside’s companies recorded these:

Date	What happened	Northside Coffee’s file	Northside Properties’ file
Oct 1	Coffee paid October rent, $3,000	Rent expense, from Coffee Checking	Rental income, into Properties Checking
Oct 5	Properties lent Coffee $20,000 to cover payroll	Loan from Northside Properties	Loan to Northside Coffee
Oct 20	Properties paid Coffee’s $1,200 insurance premium	Insurance expense, owed to Properties in Due to Northside Properties	Due from Northside Coffee, from Properties Checking
Oct 27	Coffee’s card paid a $380 plumbing repair at Properties’ building	Due to Northside Properties goes down	Repairs and Maintenance expense; Due from Northside Coffee goes down

Rent between your own companies is ordinary income and expense, so it should be paid on a schedule and at a rate you could defend as market rent. The loan needs a signed note; the entries, the interest rules and the paperwork are in intercompany loans between LLCs. The insurance premium and the repair are the small, constant kind of movement that piles up without anyone deciding anything, and it belongs in its own pair of accounts; the setup and the month-end match are in due to and due from accounts.

The pattern to avoid is the opposite: one LLC’s card paying another LLC’s bills, or one bank account receiving deposits for two companies, with each item categorized as an ordinary expense or sale. That is commingling between companies, and it is the same problem as mixing personal and business money, described in keeping an LLC’s money separate. The fix is the same too: stop it going forward, then record each past item as a balance between the two companies.

Matching the files every month

Two files that each record their own side of a transfer can disagree, and nothing in QuickBooks Online will tell you. So at every month end, each pair of balances is compared across the two files. Here is Northside at October 31:

Pair	Properties’ file	Coffee’s file	Difference
Loan to / Loan from	20,000.00	20,000.00	0.00
Due from / Due to	820.00	820.00	0.00

Rent does not appear here, because it was paid in the same month it was charged. If Coffee had paid October’s rent on November 2, Properties would show it as owed at October 31 and Coffee would show it as unpaid, and those two balances would be matched the same way.

The month is not closed in either file until every pair agrees. With three companies there are up to three pairs to check; with five companies there can be ten.

When one LLC owns another

What is it called when one LLC owns another LLC?

A holding company structure, or parent and subsidiary: one LLC owns the membership interest in another. Some owners use it to keep a building or a brand in one company and the trading business in another below it.

For federal income tax, a single-member LLC owned by another company is still disregarded. The IRS says it is reflected on its owner’s return “as a division of the corporation or partnership.” So if Northside Holdings LLC, a two-member partnership, owned Northside Coffee LLC outright, the coffee shop’s income would be reported on the holding company’s Form 1065.

For the books, nothing changes: the subsidiary still has its own bank account, its own QuickBooks Online file and its own reconciliations. The parent records its ownership as an investment in the subsidiary, and transfers between the two are recorded in both files like any other. A lender who wants one set of numbers for the whole group will ask for combined statements, which add the companies together and take the balances between them out.

Do you need a new EIN for each LLC?

Not always. The IRS says an LLC “will need an EIN if it has any employees or if it will be required to file any of the excise tax forms” it lists. A single-member LLC that is disregarded, has no employees and owes no excise tax “should use the name and TIN of the single member owner for federal tax purposes,” on the IRS single-member LLC page.

A multi-member LLC files its own partnership return, so it needs its own EIN. In practice, banks often ask for one before they will open an account in the LLC’s name, which is why most owners get one for every LLC anyway.

Can multiple LLCs use the same EIN?

No. An EIN identifies one entity. Two LLCs that each have an EIN have two different numbers. Two disregarded single-member LLCs without EINs of their own both report under their owner’s number, but they are still two companies with two sets of books.

What if your LLC makes no money?

A dormant LLC still has a bank account to reconcile, a state annual report to file and, often, a balance with one of your other companies. Northside Roastery has $500 in its account from its opening deposit, a state report due in the spring and nothing else. Its file is closed every month like the others: one statement reconciled, nothing to categorize. The work is small, and it means the balance it carries into year end is right.

What it files depends on its classification. A multi-member LLC taxed as a partnership must file Form 1065 “unless it neither receives income nor incurs any expenditures treated as deductions or credits for federal income tax purposes,” in the words of the Form 1065 instructions. A single-member LLC disregarded into its owner has no return of its own; anything it did goes on the owner’s return. Ask your preparer which applies before deciding it has nothing to file.

If a company will never be used, closing it is cleaner than keeping it. That means the state’s dissolution filing, a final return where one is due, the bank account closed and its last balance moved, and the QuickBooks Online subscription cancelled after the final month is reconciled.

Common questions about owning multiple LLCs

Can I use one bank account for multiple LLCs?

You can open one, but the books cannot then tell which company owns which dollar. Every deposit and payment would need a matching balance between companies, recorded in two files, to undo it. Give each LLC its own account and the problem never starts.

How do you do the bookkeeping for multiple LLCs?

One file per LLC, each reconciled every month, every transfer recorded in both files, and every pair of intercompany balances matched before any month is closed. How Ledgerbrook does it, and what each file costs, is on bookkeeping for multiple LLCs.

Can one LLC pay another LLC’s expenses?

It can, and the bill is still the other company’s expense. The paying company records a balance due from the other, and the other records the expense and a balance due to the payer. The company that benefits should repay it, or the two balances should be settled some other way that your preparer agrees with.

When to hand this off

One LLC is one set of books. Three LLCs are three sets of books plus the record of everything that moved between them, and the second part only works when the same person can open every file. If two of your companies already disagree about what one owes the other, that is where to start.

Ledgerbrook keeps each LLC in its own QuickBooks Online file and closes every file by the 5th business day. Each file is priced by its own size: $99 a month for up to 3 accounts, up to 200 transactions a month, and the file that carries the intercompany reconciliation is on the $199 plan. For Northside, that is $199 for the coffee shop and $99 each for the property company and the dormant roastery, $397 a month for the group. Files that are behind are brought current first through catch-up bookkeeping at $99 per month of backlog. The plans are on monthly bookkeeping, and how a group is priced is on bookkeeping for multiple LLCs.

When to hand this off: if you own more than one LLC and any of them shares a bank account, a card or a QuickBooks file with another, the books need separating before the next return is prepared. A free file review starts with the file that has the most money moving in and out of your other companies, and you get a written answer within 48 hours.