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Starting Many LLC's at One Time

In my line of work, I have observed that many new business owners like to start several LLC's at one time. It's ok to have a bunch of ideas. Entrepreneurs are problem solvers, so ideas flood the brain like a waterfall. Not to be confused with paper chasers who jump from one thing to the next often. Business A.D.D. is what I call it. Business A.D.D. is when an entrepreneur has a hard time focusing on one idea because they have so many ideas, and because they are very anxious and excited at potential they try to address all the ideas at one time.

The problem comes when you try to address them all at one time, not planning and organizing, and starting up another business before your primary business is fully developed. You lose a lot of time and money this way.

Then goes your brand and credibility. No one will trust that you know what you are doing now. I always suggest getting an Idea composition book to write down ideas as they come. This way you can focus on your primary business until it becomes self sustaining and grossing more than $25k a year.

Then you can go back to your idea book to revisit ideas. You may have changed your mind, or because of your experience networking and gaining a knowledge base in business operations, can expand on a previous idea even further.

Also, It is not uncommon for a primary business to spin off another business that complements its product or services. The growth is organic this way. Then you don't look like you are all over the place.

These are some of the things that can happen opening too many businesses at one time:

  • You spend money on state fees for a business you are not operating that you could use to operate your current business.

  • In some cases, you can't write off business expenses unless you have business earnings.

  • After so many years of not making a profit, the IRS could downgrade your business to a hobby. As of 2018, hobbies expenses are no longer deductible. The hobby income would be included in taxable income.

  • It is easier for someone to do fraud in the business name because it is not in operation and not being monitored.

  • You take away time from your primary business, which could cause it to fail or lose income.

When it comes to business operations, planning is important. Think of watching your grandmother cook a Thanksgiving dinner. She doesn't pit everything in the oven or on top of the stove at one time. The whole meal would be ruined with some dishes being burnt, undercook, or flavorless.

This is why she plans by writing out the menu, makes a shopping list of the things she needs, buys the items, preps a day or two before, and then has a strategy on how preparer the meal so that everything is done by the time she has set for the family to eat.

So remember a bird in the hand is worth two in a bush.

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