If you are a business owner considering a new or separate venture, it may be wise to form an additional company to handle your new business. Some companies form subsidiary companies that have a connection to their original, or “parent” company, while others choose to form an entirely new LLC with no connection to any other.
Forming a new company can be advantageous to small business owners for a variety or reasons. The chief concern from your business lawyer’s standpoint is insulation. Protecting the assets of one business from the liabilities of another is a huge factor in deciding to create an additional company—If you are taking on another project, don’t endanger your original with the risks of the new venture. If for instance, you own Nate’s South Texas Landscaping, LLC, and through this business you have gained knowledge and understanding of the world of small engine repair, you may wish to form another company, Nate’s South Texas Small Engine Repair, LLC. Instead of offering more services under one particular LLC, you can split out and create a new company, insulating one from the other. Your landscaping business will not be affected by a liability incurred by your new engine repair shop, and vice versa.
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