How Do You Structure Multiple Businesses under One S-Corp?

Question: I have a S-Corp and I want to have multiple businesses owned by it. What is the best way to structure this?

Answer: I’ve found that this happens a lot. One of the best ways to have multiple businesses under one S-Corp structure is to form a LLC for each activity. The LLC’s will be “single member LLCs”, or SMLLC’s. They are wholly owned by the S-Corp. They don’t file separate tax returns since they are considered to be “disregarded entities” for tax purposes.

This is simple to implement, and requires the least amount of accounting horsepower. Another way to do the same thing is to form multiple subsidiary S-Corps, each S corp owned by the parent S-Corp. This step requires that you file for a Q-Sub election, and as a result of that, each S-Corp does not have to file a separate Federal tax return, but is merely a legal entity, not a tax entity. This may be helpful in payroll tax situations, or where there are multiple states involved.