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Branching out into a new business under a DBA

Asked by: Peter Garcia  — 10 March, 2011

We created a Sub S corporation. But plan on entering the mobile application business but we want to use another name to be associated to that division, and not the name of the Sub S corp. The best way to do that I am assuming is to create a DBA and have the owner be the Sub S corp?

Answered by: admin  — 10 March, 2011

Dear Peter,

You need to carefully consider this decision. A DBA will indeed provide you with a separate name for your S-corporation under which to engage in your mobile application business. However, a name is all that DBA is good for. What I mean by that is that a fictitious name will not grant your new business venture separate limited liability. So, if in the worst case scenario your mobile app business were to fail, its debts will be payable by the main S-corporation. As you can see, in this scenario your main business will be responsible for the debts of your new venture.

In order to avoid this situation, you can do one of two things. One, you can form a new entity (S-corp or LLC) to engage in the mobile app business. And two, a little more sophisticated, you might consider forming a Series LLC in one of the states that allows for such an entity to take care of all of your business ventures. The Series LLC (SLLC) will allow you to essentially have different businesses, each with its own limited liability, under an umbrella of a single company.

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