What Are the Pros and Cons of Using Your LLC to Be a Member of Another LLC?

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Having one entity own part of another has, as you noted, its pros and cons. On the plus side, you get an extra layer of liability protection. In addition, there may be tax advantages to having this income flow through your LLC rather than coming to you directly. The downsides include the bureaucracy of having more entities than may be necessary and possible complications should you choose to take on another business owner in your own LLC. Because the solution that's right for you depends on your personal tax situation and your ultimate goals for each of these businesses, make sure you speak to legal and accounting advisors regarding your specific situation.

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