Is it worth creating a second business for an unrelated product?

[spectrums_studios]

I don't just mean a separate shop. I know you could just create a separate Ebay shop for a separate class of products and just use the same LLC and financial vessels for multiple shops, but … Is it legally/financially worth it (or maybe required??) to create a separate business, complete with new LLC, new credit card, new bank account, etc… for the second, unrelated product group? Pros and cons of each option?

Anyone here has more than one business? If so, what made you create separate businesses instead of just lopping everything under one legal business and simply funnel all your “shops” under that single umbrella?

[donsdetour]

Well how is the original LLC set up: are all party's in that doing the new stuff??

Is the new stuff a different risk factor in your set up??

In most cases if the LLC is just for a resale system one can go with it.

Does setting up a new LLC protect the old one and you better?

Ah it is in the end result up to you.

[simply-the-best-for-you]

Unless there is some special reason you need the benefits of an LLC, it's not usually even worth it or necessary to have an LLC.   It's pretty unusual to even set up an LLC for a resale biz.   Perhaps if you share a bit about why you have an LLC, that might help illuminate things, but in general I would not advise someone to set up an LLC even, it's overkill, so no, I wouldn't advise 2 different LLC's simply to sell another product.  

If this is also a B&M business, then my answer may be different, but if you're talking strictly online reselling, it sounds like overkill, without knowing any details. 

[chapeau-noir]

---

@spectrums_studios wrote:

I don't just mean a separate shop. I know you could just create a separate Ebay shop for a separate class of products and just use the same LLC and financial vessels for multiple shops, but … Is it legally/financially worth it (or maybe required??) to create a separate business, complete with new LLC, new credit card, new bank account, etc… for the second, unrelated product group? Pros and cons of each option?

Anyone here has more than one business? If so, what made you create separate businesses instead of just lopping everything under one legal business and simply funnel all your “shops” under that single umbrella?

---

The reason for an LLC is basically to separate business from personal in a liability situation as well as conferring some tax flexibility.  Having a second LLC for a different line of products doesn't confer any extra protection that the original LLC would not, and would cost $$$.

[m60driver]

Methinks it would be far easier to simply take your existing LLC and adding on a DBA, doing business as, for a second account.  Although such options may vary by state.

[chapeau-noir]

They could also create a subsidiary under the original LLC. 

[spectrums_studios]

Thanks all for the answers so far!

I guess, I was thinking for tax purposes, a new, unrelated expense might be unacceptable for the IRS. (ie… Why are you expensing “garden” related stuff for your “spiritual” related business?) Also, since I’m only *considering* this business, I started purchasing items related to “gardening” on my personal accounts to test stuff out to see if there’s any tooth to this new business idea before I fully jump in.

Wouldn’t it be complicated to separate my new business purchases from my old business and my personal finance? If I create a 2nd business, then it’s easy (tax wise) to see that my start-up costs might be incurred on my personal accounts at the time of start-up, right? But if I meld my 2nd business with my first, then it looks like it’s the same business, and thus would raise questions as to 1) why some of my business expenses are made in my personal account instead of in my business account, and 2) Why I’m expensing items unrelated to “spirituality”.

Hope that makes sense?

[m60driver]

---

@spectrums_studios wrote:

Hope that makes sense?

---

You are either making it more complicated then it is or, perhaps, it is time to pony up and pay a CPA for some advice as to how to best move forward in your particular situation.

[chapeau-noir]

---

@spectrums_studios wrote:

Thanks all for the answers so far!

I guess, I was thinking for tax purposes, a new, unrelated expense might be unacceptable for the IRS. (ie… Why are you expensing “garden” related stuff for your “spiritual” related business?) Also, since I’m only *considering* this business, I started purchasing items related to “gardening” on my personal accounts to test stuff out to see if there’s any tooth to this new business idea before I fully jump in.

Wouldn’t it be complicated to separate my new business purchases from my old business and my personal finance? If I create a 2nd business, then it’s easy (tax wise) to see that my start-up costs might be incurred on my personal accounts at the time of start-up, right? But if I meld my 2nd business with my first, then it looks like it’s the same business, and thus would raise questions as to 1) why some of my business expenses are made in my personal account instead of in my business account, and 2) Why I’m expensing items unrelated to “spirituality”.

Hope that makes sense?

---

You may be over-thinking this.  I have sold everything under the sun here, all on one ID (the one I also post under) - right now I'm mostly clothing with old tech and sports equipment (some DVDs) mixed in - so a variety.  I've also never had a business account here, though I have a state business license, and do not have a business checking account.  No questions have ever been asked, nor should there be, because it makes no real difference - what you do need to do is to provide the correct accounting and attribution, which is what I do.

Spreadsheets are easy, and you can just start up another ID for your other products and use it to record transactions, which will be separated due to the two IDs.

But I agree with @m60driver  that you should consult an accountant - just try not to make things too complicated.  Starting up another ID for another product is simple and very commonly done.

[dbfolks166mt]

     As m60drvr suggested you need to talk to your CPA regarding this one. Nobody here has any idea about your current LLC setup and whatever second line of business you are contemplating. 

[simply-the-best-for-you]

Again, if you're talking about a resale business, there's absolutely no reason to have an LLC at all.  Most resellers are Sole Proprieters & you can sell in as many categories as you want, it's still a resale business.  Again, setting up an LLC can be expensive, so unless you have some special reason to need the Liability portion, there's no need for an LLC & most resellers do not really have liability concerns (there are exceptions).   LLC's also require Officers IIRC & some corporate filings, than create extra recordkeeping beyond that of the normal accounting.  

If you're a Sole Prop, like most small sellers are, it's all your money regardless of what account it comes from, you just need to document it.   You wouldn't technically even need separate accounts, though you may want it for your own record keeping.   Everything flows through the Schedule C on your personal tax return.   I personally don't even have separate accts for everything, it doesn't matter.  I have categories set up in my personal acctg software, for all my business expenses & income.  

If you're not talking about a resale business, then you'd be best to ask a CPA.  If you do seek a CPA, be sure you find someone who has knowledge with online businesses, most don't.   Even one LLC is probably overkill.   The one exception that comes to mind is if you sell food products, especially home made, where there can be a liability compenent.   Also, your SBA likely has SCORE available which is a great resource (Society something or Retired Executives), but again make sure the person is familiar with online businesses.  

I am not a CPA or accountant, this is just general knowledge, YMMV.