If we open a second restaurant, should weforma separate LLC or can we roll it into the first restaurant’s LLC?

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If we open a second restaurant, should weforma separate LLC or can we roll it into the first restaurant’s LLC?

We currently have a restaurant open as a LLC. We are going to open another restuarant with the same name. Should we register the second restuarant as an LLC or can we put it under the first restaurants LLC?

Asked on July 1, 2011 under Business Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

There is no right or wrong answer to this--it's a matter of weighing the pros and cons.

Pro to having 1 LLC: administratively simpler; will facilitate moving money from 1 restaurant to another, for operations or investment; will facilitate moving employees from 1 to another; will facilitate shared expenses; may let you take tax losses from 1 against profits from the other.

Con to having 1 LLC: all your eggs are in one basket; if 1 restaurant incurs substantial legal liabiltiy (e.g. defaults on a debt; violates a big contract; violates tax or payroll law; a patron is injured or gets sick and sues) the other one is vulnerable; it is not insulated from the liabilty of the first.

I am risk adverse; I therefore would have seperate LLCs, for better liability protection, but that's based on my own personality and preference. You need to do what works for  you.


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