How do I Make My LLC a Parent LLC?

Limited liability companies (LLCs) provide perfect building blocks for parent-subsidiary company structures due to their limited liability and flow-through taxation.

Limited liability companies (LLCs) are one of the most convenient entities to create parent-subsidiary companies with. Forming an LLC to act as a parent company to one or more other LLCs is an easy way to streamline income and manage personal liability with ownership of multiple businesses. A parent LLC is an LLC that is a member or owner of another LLC or company (a subsidiary). To make your LLC a parent LLC, you must create subsidiary companies for your LLC to own.

Instructions

Create Subsidiary LLCs

1. Choose a state, name and registered agent for your new subsidiary LLCs. Each state enforces different laws governing the creation, operation and taxation of LLCs, so research your options carefully. An LLC's name must be unique, which means it must be recognizably different from the name of other companies and organizations in your selected state of formation.

2. Download or request a copy of your state's required forms and paperwork for LLC formation for each of your subsidiary LLCs. Most states call LLC formation documents "Articles of Organization" or a "Certificate of Organization." Some states offer complete online filing services to reduce paperwork.

3. Complete the articles of organization by entering your company's name and the name and address of its registered agent into the appropriate fields. You may be required to provide a list of the LLC's initial members and their contact information depending on your state of formation. Be sure to list your future parent LLC as the owner (member) of all of your new planned subsidiary LLCs.

4. File your subsidiary LLCs' formation documents and the requisite fees to the appropriate address depending on your state of formation. Most states provide complete online filing services, while others require you to send the documents to their secretary of state's office. Formation fees for new LLCs range from $100 to $1,000 as of 2010.

5. Maintain all of your LLCs by filing annual reports if they are required by your state of formation. Record all of the income and losses generated by the subsidiary LLCs as those of the original parent LLC. File taxes for your parent LLC according to its tax classification as either a sole proprietor, partnership or corporation.

References

• FindLaw: How to Form an LLC
• PowerHomeBiz: Setting Up LLC as Parent Company with other Separate LLC