Q&A: Should I create two separate companies for my two brands?

This is a question I received by email is response to an article I wrote at NichePursuits.com. I’ve removed private information.

The Question(s)

I had a couple follow up questions I wanted to ask. I have 2 websites.

One is an Amazon affiliate with the brand name [Outdoor Brand]. The other is a Spanish site called [Language Brand] where we have an online course teaching Spanish to people.

I think after reading the article I need to Trademark the [Outdoor Brand] and the [Language Brand].

However, I believe I will also need to setup an LLC or a Sole Proprietorship now that I am selling online courses on the Spanish site and making money from people that way. Do you have any recommendations on the best way to proceed and if it makes sense to setup an LLC or Sole Proprietorship for my two brands?

My Response

Thanks for reaching out. The way you approach an LLC depends on your risk preferences. Forming an LLC creates a new legal entity that can take on its own debts and obligations. Basically, as long as you treat an LLC as a separate entity, creditors cannot go after your personal assets for the financial obligations of the LLC. So it is a “limited liability” company because it limits your personal liability.

A sole proprietorship, on the other hand, is just you so your personal assets are 100% on the line for the business. If you have personal assets that you would prefer to shield from financial liabilities of your company, an LLC can accomplish that.

You could create an LLC to run both your online projects. You could also create two separate ones. The question is whether you want to try to keep the liabilities of the two projects separate.

Another issue is the exit plan, if you foresee that you may eventually want to sell off one project, it may be a good idea to start putting together the formalities and do separate LLCs. If your state allows it, you can also do a series LLC. A series LLC allows you to basically operate two divisions of one LLC that are then treated as separate LLCs as long as you keep separate books. You can avoid having to manage and pay for two LLCs that way.

Hopefully that helps a bit.

Let me know if you want help with the trademark issues. My gut tells me that the outdoors one might be tricky.

Additional Comments

Now that I’m approaching this question for a second time, I’m not really sure if it answered his question. For the trademark issues, a trademark can be owned by an individual or by the LLC. I would probably have the trademark be owned by the LLC. I will have to make the reasoning in a separate, future post.

Let’s Get in Touch

If you would like to ask a question about trademarks, copyrights, or online business, shoot me an email (thelawofthebrand@gmail.com) or a text (702-291-1799) or schedule a meeting.

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About this picture: In the fall of 2016, we went away for a long weekend. Apparently it was really windy while we were gone. Our trampoline ended up on the roof of our garage. I took a picture of it to show all my friends. As I was looking at the picture, something seemed off. Then I realized that a large, dead tree that used to be by the garage was gone. It apparently got blown over. Luckily, it fell right between two fences and didn’t do any damage to the garage.

Leland Faux
Attorney Leland Faux blogs about trademark, copyright, and online business issues at Law of the Brand. You can submit a question by email to thelawofthebrand@gmail.com.

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