How focused does a single company have to be?

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I want to make a go of cobbling together income from various projects instead of working for the man. But given the breadth of “various projects” I’m trying to understand if legally speaking it’s okay for me to have a big umbrella LLC or if I should have a distinct LLC for different types of things or if I can just throw it under the one business.

If context matters, things I am contemplating doing:

  • Freelance coding/spreadsheet creation
  • Making apps and monetizing them somehow
  • Writing articles/blogging
  • Producing & selling “cottage foods”
  • Pet sitting/walking
  • Virtual tutoring/language practice buddy
  • Video transcription
  • Doing research for people & compiling spreadsheets/documents on stuff like thing/price/location/reviews/features/etc
  • Tax prep

So enough things where there’s a huge spread, but enough things where I don’t want to make an LLC per thing.

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No legal or business knowledge whatsoever but interested in learning more about cottage food production and distribution if you share along the way!

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So at least in my state and some others, there are “cottage food laws” that allow you to produce food in a non-commercial kitchen and sell it without the overhead of federal inspection, so long as you:

  • Take a food safety course and earn a food handler’s card
  • Sell directly to consumers (i.e. individuals, not restaurants or stores for re-sale)
  • Sell only shelf-stable goods or eggs (up to 250 DOZEN per month)
  • Sell only within the state
  • Earn less than $10k in net revenue per product per year, but “product” is very loose. I can make $10k from white flour tortillas and $10k from wheat flour tortillas and it’s fine.

It’s pretty loose overall in terms of requirements. Longer term if things go well I’m thinking I’ll put a sales page on the blog I’m starting, doing some craigslist ads, maybe doing farmer’s markets, and since I’ll be not working, maybe be open to setting aside a few hours a week to drive around doing delivery for places close enough to my house. Initially though, I would like to just see if my friends are interested in buying eggs.

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Huh. Per product is interesting.

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It is! I would understand that more if it was a lower dollar amount. But 10k per product? My mind will be blown if I make 10k net on everything in a year.

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Seems like once you get the correct license in my state you perhaps can sell interstate? source: listicle (lol)

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I’m sure there’s something you could get here to sell interstate but I’m not going to worry about it until I at least get one sale ever. :stuck_out_tongue:

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So, this is based of the companies I’ve had in NM, IL, KS, and PA

I’d put these in one:

  • Freelance coding/spreadsheet creation
  • Making apps and monetizing them somehow
  • Writing articles/blogging
  • Virtual tutoring/language practice buddy
  • Video transcription
  • Doing research for people & compiling spreadsheets/documents on stuff like thing/price/location/reviews/features/etc

These in one:

  • Producing & selling “cottage foods”
  • Pet sitting/walking

And this as another one:

  • Tax prep

Depending on the state, you can register to undertake any and all lawful business that you are licensed for. However, I worry about things like insurance, IRS audits, and most importantly, lawsuits.

If someone sues you over getting sick from an item produced in your home, be sure that your home isn’t going to be in danger of the lawsuit they file. Depending on the rules/state, any asset used in the production could be subject to liquidation at auction if a large enough penalty is assessed.

The tech stuff is easy, pretty safe, and makes sense to group together. The others, lots to look into.

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Yeah, if I’m selling food to anyone but just friends I am 1000% getting good insurance.

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I’m not even really sure what the use of an LLC would even be for that first group instead of just working under OP’s name.

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Depending on your insurance company and what level of business you’re doing, you may be able to use a personal umbrella policy instead of separate business insurance.

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My concern would be around insurance, and if you have too many companies, needing to buy insurance for each of them, maybe having separate accounts with fees on each one, lawyer reviews on multiple documents, etc.

But I don’t know any of those things, I’d just be looking into them.

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I’ll say more later…but Tim Ferris appears to have done exactly this.

The insurance would be complex, but the business isn’t eggs or hiit workouts or speaking aramaic.

It’s becoming a broad specialist in deep learning about different things in an experiential way, including marketing and selling wares and apps related to your discovery about each microventure.

I think that you are looking at being a school or media corp with insurance covering the branches of experience.

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The tl;dr is - I’m going to second and third (and fourth) the point that while you certainly can create a business entity to carry on any legal purpose, insuring it is likely to be a complicated mess if you group all these activities together in one business entity unit.

Now for more details -

There was a now defunct legal doctrine where you had to specify what the business was within the charter (or other founding docs), and you had to operate within that scope. That’s gone now in the United States, and all states will let you create a business entity that operates for “any and all” legal purposes.

The next piece is asking why you are creating a limited liability entity at all. There are basically 2 reasons why people choose limited liability entities - tax purposes & liability purposes. (Yes, there are other reasons. These are usually the two big driving purposes). Since more business entities have been created that allow you to choose your taxation now, it often becomes all about the limited liability.

Limited liability means that if you treat your business as its own entity, the assets/debts will be treated apart from your own on a personal matter.

Combining all these business purposes into one entity then means that any liability - creditors, debts, lawsuits, and so on - will trigger the entirety to be responsible.

The cost of insuring these types of businesses are extremely varied. Food safety has a specific set of rules/regulations and insurance liability expectations (because people can get sick or die). Working with animals has a different set of industry liability costs (because animals bite people and damage things). Being a fiduciary has its own liabilities (because people trust you with money you can lose). And so on.

Often insurance costs are determined based on the value or amount of revenue your business does. So let’s say you make $100,000 in tutoring and $100 in pet sitting. You absolutely don’t want to have to purchase professional pet industry liability insurance to cover the value of a $100,100 business. And if you group things together, you can be liable and on the hook for the entirety of that $100,100 for pet damage.

The recommended advice (Note - not giving legal advice here, every disclaimer!) would be to group like activities in their own entities and then be rigorous about your accounting so you never commingle the funds/accounts/records across businesses. It also would make sense to consider low risk/low revenue activities not even being worth the price of annual reporting/registrations associated with limited liability entities & just having decent personal umbrella liability insurance for that.

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This is kind of what I was thinking. I expect that with tech stuff I’ll make much more money than with food stuff, and the risk is much lower. Mostly I suspect it makes sense to separate LLCs predominantly on the basis of types of risk and type of insurance needed.

I’m uncertain on whether I even need an LLC for writing up scripts for people or blogging, as risks would be generally low and expenses low. The primary benefit of lumping these in with other businesses would be deducting expenses from endeavors such as homesteading from earnings of tech work, but that also feels scummy somehow.

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The IRS is going to have a problem if a hobby is your write-off from tech as well. So tread carefully if you aren’t looking at genuine business profit on homesteading stuff.

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Depending on what your tech biz is doing, consider if you are liable if there is a data breach/privacy problem that results (think GDPR and whatever Cali has). It may be interesting to research what kinds of lawsuits there are against developers; illegal use of IP comes to mind… (and could be accidental, but courts maybe don’t care).

Sorry that was not meant as a reply to fifofum I don’t know how to fix that!

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I figured this would be the case but in trying to find specific regulations I was struggling. I also feel like basically if I’m making any legitimate income from software, it’s gravy anyway and I don’t mind being taxed on it.

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I know you’re busy but batsignal @anomalily queen of making money off of cats, money, and tea.

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There’s no legal requirement that they be in separate categories, but if you’re doing anything that requires licensing or insurance, it’s best to have LLCs that match the IRS business code to the type of licensing or insurance you’re getting (i.e. if you’re classed a media company under your state LLC and you get food insurance, that can cause issues).

But you should consider if you do want to split work with someone else, or have your spouse materially benefit from the business. I.e. OMD is my umbrella company for all my stuff (included licensed e-commerce food production) but when I worked on podcasting studio stuff it was under different LLC because there were multiple people involved.

For software stuff where you’re freelancing for an existing company you can usually just do a DBA or 1099 - the LLC doesn’t really protect you any more than a DBA. But if you might need liability business insurance, the LLC can help you get it sometimes.

Yup that. The biggest write-offs anyway are likely going to come from self-employed health insurance and home office deductions, unless you have REALLY high COGs, so best to keep those on separate schedule Cs.

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