For most peo­ple, one LLC is enough. But some­times it makes sense to have more than one LLC.

If you own major busi­ness assets like equip­ment, ware­houses, machin­ery, vehi­cles, etc., then you might want to set up another LLC and trans­fer your busi­ness assets to it. The LLC that owns these assets is called a hold­ing com­pany. Your other LLC that does busi­ness with the pub­lic is called an oper­at­ing com­pany. Your oper­at­ing com­pany can then lease the assets from your hold­ing com­pany for mar­ket rates.

Why would you want to do this? If some­one sues your oper­at­ing com­pany, the assets in your hold­ing com­pany are pro­tected from that lawsuit.

There’s another sce­nario where you might want to have more than one LLC. That’s when you have two dif­fer­ent lines of busi­ness. If you have sep­a­rate divi­sions, do busi­ness in sep­a­rate loca­tions, run busi­nesses in sep­a­rate indus­tries, then you might want to set up sep­a­rate LLCs for each line of busi­ness. Then the lia­bil­i­ties in one oper­at­ing com­pany are pro­tected from the other oper­at­ing company.

There are some draw­backs to hav­ing LLC hold­ing com­pa­nies and mul­ti­ple LLCs. You must treat each LLC as strangers. They must each keep sep­a­rate books, sep­a­rate bank accounts, sep­a­rate employ­ment agree­ments, etc. If they share over­head, then they need to have a shared ser­vices agree­ment or an inter-company agree­ment between the com­pa­nies. You need to have doc­u­ments trans­fer­ring asset own­er­ship to your other LLCs such as a bill of sale, war­ranty deed, assign­ment, etc. Then you need to have some sort of rental or lease agree­ment between your LLCs.