Q: In MD can I use my llc to run an apparel store and for a self nail salon? Do I need 2 trade names under the llc?
I use my llc to run my apparel store but I want to start a self run nail business and I don't want to start a new llc. Can I use the llc to parent the 2 companies ? Do I need to purchase a trade name for each or can I just do one for the nail business and continue operating the llc apparel store as normal ? What is the best way to avoid legal/tax confusion down the road?
A: Most LLC articles of organization contain a purpose clause that authorizes the LLC to engage in any lawful business or activity, but unless the articles strictly limit the business activity of the LLC, then the LLC can run any type of business it is otherwise lawful for anyone to engage in. The reasons why you might not want to do so has to do with maintaining separate taxing entities for tax liability purposes, and for liability purposes having to do with third-parties suing one of the two businesses and shielding the other business from any adverse judgments. However, if you have adequate insurance and otherwise are not concerned about those risks, then you can run any number of businesses under your LLC. You might find it beneficial to register each business under its own trade name. SDAT charges $25 per trade name, which you would register under your LLC. The LLC files just one set of tax returns and pays just one annual fee. Trade name registrations expire after 5 years and need to be renewed before they expire, and SDT does not mail out reminders, so you would need to keep on top of the trade name expiration dates to keep them in effect.
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