Can I have multiple LLCs operating out of one bank account?

Legal & Legislation
3yFollow

Can I have multiple LLCs operating out of one bank account?

Corey Duran
Rental Property Investor · Toledo, OH · Member since 2023 · 39 posts · 14 votes

With the help of an attorney and some responses here, I have come up with the game plan to have a business structure as follows:

Trust (Top ownership that owns the management company)

Management Company LLC (first actual company that owns all the LLCs below)

LLC 1 (rentals), LLC 2 (rentals), LLC 3 (rentals) LLC 4 (rentals) LLC 5 (Flips short holding) LLC 6 (Crypto mining) LLC 7 (Music production/band more of a hobby but def a business) LLC 8 (a future business I come up with)

Trust at the top that owns a management company. Below the management company, I will have multiple LLCs that hold rental properties. I will also have other businesses owned by this company. To my understanding, I can operate all of this out of one bank account since I am the sole owner of all of the LLCs and I have no partners. The attorney thinks I will be fine and my accountant said for tax purposes I do not have to provide any bank information to the IRS if I am the sole member as it all just goes to my personal return anyways. 

As long as my accounting is solid do you think I will be fine if someone tries suing me in one of the LLCS down the chain? Safe from piercing the veil because of one bank account? I am open to having more than one bank account but would prefer to have as few as possible since I handle all the money throughout the business.

0Reply
202 views

Most Popular Reply

Courtney Nguyen
Spring, TX · Member since 2017 · 138 posts · 44 votes
3y

@Luis Alvarez thanks so much.  I really appreciate it!

1Reply
See this reply in the discussion

18 Replies

Jump to latestLatest
  • Erik D.
    Investor · Minneapolis, MN · Member since 2014 · 79 posts · 17 votes
    3y

    I have the exact same setup and only have a bank account for the management LLC. The only issue I've had is when I have a large check from a refinance or a sale and the check is made to one of the lower LLCs and not the management LLC, the bank gets cranky and wants me to open a separate account. So far I've been able to sign the checks over to the management LLC and make the deposit.

    1Reply
  • Corey Duran
    OP
    Rental Property Investor · Toledo, OH · Member since 2023 · 39 posts · 14 votes
    3y
    Quote from @Erik D.:

    I have the exact same setup and only have a bank account for the management LLC. The only issue I've had is when I have a large check from a refinance or a sale and the check is made to one of the lower LLCs and not the management LLC, the bank gets cranky and wants me to open a separate account. So far I've been able to sign the checks over to the management LLC and make the deposit.

    Hey Erik, thank you for sharing. Your management company owns the lower chain LLCs? I’m switching over from the one llc I have now that owns all of my properties. Do you have any suggestions you wish you knew when starting this setup? Advice on things I should do or anything you can add that I should also do or look into.
    0Reply
  • Erik D.
    Investor · Minneapolis, MN · Member since 2014 · 79 posts · 17 votes
    3y
    Quote from @Corey Duran:
    Yes, my structure is Trust --< Main LLC --< Rental Property LLCs

    I had an attorney handle the transition to this structure. Going forward I create a new LLC for each new acquisition.

    I would just make sure your bank is okay with your Main LLC depositing checks for your Rental Property LLCs. Smaller checks are no big deal but for larger checks the bank wanted signed affidavits and proof of how to LLCs are setup. I've been told several times now that depositing large checks written out to a Rental Property LLC but deposited into the Main LLC account will be a 'one time courtesy' lol. When closing on a refinance or a sale, the title company wants to write the check out to the Rental Property LLC, which is why this happens to me.

    This structure enabled me to move a line of credit from my personal name to my Main LLC which improved my personal debt to income ratio. Since the line of credit is moved to the LLC, it is basically erased from my personal credit check.
    0Reply
  • Luis Alvarez
    Real Estate Consultant · Colorado Springs, CO · Member since 2014 · 86 posts · 64 votes
    3y

    Hey @Corey Duran, 

    Wanted to share my experience/background from estate planning/asset protection pov:  

    Personally, I have a similar structure, although I would probably separate the passive entities (rentals) from the active entities (flips, music production, etc.) because once you get to a certain level of revenue, I would want to not only capitalize on an S-Corp election (and all those tax advantages) but also separate the liability one naturally incurs on "active" businesses vs. "passive" businesses.  (But that could be a thread onto itself).


    Regarding the biggest issue here, using one bank account for only the holding LLC will save you a lot of extra admin work and bookkeeping, however, if I were a plaintiff attorney in a lawsuit where you are the defendant, the co-mingling of your funds amongst all your entities would be a easy way to show to the court that these entities aren't being treated separate and are ultimately an alter ego for you, in an individual capacity, and your structures (and underlying assets) could be folded into one big pot to pay out a claim. To @Erik D.'s point, if you can deposit checks made out to different entities into your holding LLC (and you can get the financial institution on board), then yes, it's a lot easier from an admin standpoint.  While your tax consideration is inconsequential because they would all go to your personal tax returns anyways, from a legal standpoint, we would point out that this approach would have you in a similar position as if you had all these properties and business owned in your personal name.

    I know there's a LOT of contradictory commentary on BP and the interned regarding LLCs and what they do and what they don't...one easy thing to keep in mind is that for tax purposes, the IRS doesn't recognize LLCs...tax treatment is either a sole prop, partnership, or an S-Corp.  LLCs are strictly a legal asset protection tool...so long as certain corporate maintenance and formalities are adhered to.  One of those is keeping separate accounts. 

    This is not specific legal or tax advice, but just observations from my unique perspective in planning and asset protection. Hope this helps :)

    0Reply
  • Corey Duran
    OP
    Rental Property Investor · Toledo, OH · Member since 2023 · 39 posts · 14 votes
    3y
    Quote from @Erik D.:
    Quote from @Corey Duran:
    Yes, my structure is Trust --< Main LLC --< Rental Property LLCs

    I had an attorney handle the transition to this structure. Going forward I create a new LLC for each new acquisition.

    I would just make sure your bank is okay with your Main LLC depositing checks for your Rental Property LLCs. Smaller checks are no big deal but for larger checks the bank wanted signed affidavits and proof of how to LLCs are setup. I've been told several times now that depositing large checks written out to a Rental Property LLC but deposited into the Main LLC account will be a 'one time courtesy' lol. When closing on a refinance or a sale, the title company wants to write the check out to the Rental Property LLC, which is why this happens to me.

    This structure enabled me to move a line of credit from my personal name to my Main LLC which improved my personal debt to income ratio. Since the line of credit is moved to the LLC, it is basically erased from my personal credit check.

    I see. I will talk to my bank about the possible check issues. I believe this structure will do well for me and it sounds like it is doing well for you. Silly question but how do you come up with the names of the LLCs? You do not have to share their names. I don't know if I should have them be a trade name or just "doing business as" when I market properties. I only have one LLC right now that is named after a band I was in and it isn't very pleasant trying to explain to people on how to spell it and whatnot.. so im trying to prevent this in the future with the restructuring.

    0Reply
  • Corey Duran
    OP
    Rental Property Investor · Toledo, OH · Member since 2023 · 39 posts · 14 votes
    3y
    Quote from @Luis Alvarez:

    Hey @Corey Duran, 

    Wanted to share my experience/background from estate planning/asset protection pov:  

    Personally, I have a similar structure, although I would probably separate the passive entities (rentals) from the active entities (flips, music production, etc.) because once you get to a certain level of revenue, I would want to not only capitalize on an S-Corp election (and all those tax advantages) but also separate the liability one naturally incurs on "active" businesses vs. "passive" businesses.  (But that could be a thread onto itself).


    Regarding the biggest issue here, using one bank account for only the holding LLC will save you a lot of extra admin work and bookkeeping, however, if I were a plaintiff attorney in a lawsuit where you are the defendant, the co-mingling of your funds amongst all your entities would be a easy way to show to the court that these entities aren't being treated separate and are ultimately an alter ego for you, in an individual capacity, and your structures (and underlying assets) could be folded into one big pot to pay out a claim. To @Erik D.'s point, if you can deposit checks made out to different entities into your holding LLC (and you can get the financial institution on board), then yes, it's a lot easier from an admin standpoint.  While your tax consideration is inconsequential because they would all go to your personal tax returns anyways, from a legal standpoint, we would point out that this approach would have you in a similar position as if you had all these properties and business owned in your personal name.

    I know there's a LOT of contradictory commentary on BP and the interned regarding LLCs and what they do and what they don't...one easy thing to keep in mind is that for tax purposes, the IRS doesn't recognize LLCs...tax treatment is either a sole prop, partnership, or an S-Corp.  LLCs are strictly a legal asset protection tool...so long as certain corporate maintenance and formalities are adhered to.  One of those is keeping separate accounts. 

    This is not specific legal or tax advice, but just observations from my unique perspective in planning and asset protection. Hope this helps :)


    Wow great info and insight. Thank you for taking the time to share all of this with me. The idea that my attorney had was to have the one bank account be with a management company LLC that is the owner of the llcs below it. The llcs below it are the actual holding companies and the management company is the one who manages the money or is the central paymaster with one bank account. With what you said I could have two business bank accounts.. one for the passive income (Management company and the holding llcs/rentals it owns) and then another bank account for the flips, music production, etc. Do you think something like that would help? I am not opposed to having more bank accounts but I truly would love to have less admin work if possible. However, I do not want to easily open myself up to lawsuits from comingling. The management company having agreements with the holding companies to manage their properties and money is the solution my attorney came up with.

    Any advice is greatly appreciated as I really wanna get a strong business structure going forward and plan to implement all of this in the next month so I am trying to do as much research as I can now. So in summary with the info of what I do. Rentals, flips, real estate agent, music production. How would you recommend I set up my structure? How many bank accounts? Should I have an LLC for my real estate agent business?

    1Reply
  • Luis Alvarez
    Real Estate Consultant · Colorado Springs, CO · Member since 2014 · 86 posts · 64 votes
    3y

    Hey @Corey Duran, 

    Sorry for the delay, it was a crazy week/weekend.  And no worries about me chiming in on here...there was a lot that I saw with estate planning and asset protection that isn't taught/known to seasoned investors and attorneys and CPAs.  Unfortunately, and fortunately at the same time, we now live in a world where anyone with an internet connection has a voice...so we just have to navigate through that. 

    I think the idea of having 1 management company handle all the management aspects of the real estate investments and even collect their rents via management agreements offloads a lot of the "active" part of the business, which is where liability arises, or another words, can be shifted to.  (IE if you have a partnership ownership of a rental property and one is active and the other is more a silent partner, when sh** hits the fan, the silent one can say "hey, I'm not involved in day to day stuff, I just collect profits or post losses)  But the issue I see there is that once the rent is collected, those profits or losses have to go somewhere...they can't stay in the management company's bank account because it doesn't own the rental properties. Thus, you create a co-mingling of funds in one bank account, one pot, and if any liability arises in any of them, a savyy plaintiff attorney would uncover (during the discovery process of a civil suit) that these are not treated as separate businesses and instead of looking at just 1 asset being on the hook, they're now all on the hook.

    I get why there's so much push back against setting up multiple entities, multiple bank accounts on BP, and on the internet in general.  Many of us try to keep costs reasonable, after all, we're in this for business.  And not seeing an instant return on money spent is the first place we look to cut expenditures. But IMO this is the mistake of practicing "resulting", where we take a certain course of action (or inaction), no dire consequences happen, thus, we believe that our decisions were correct because nothing bad happened.  

    Don't mean to drag on more in here. But I can share my structure with you if you'd like.  Feel free to DM me.

    1Reply
  • Courtney Nguyen
    Spring, TX · Member since 2017 · 138 posts · 44 votes
    3y

    @Luis Alvarez hi Luis.  I just sent you a DM.  Could you please share your structure with me too?  Thanks!

    1Reply
  • Luis Alvarez
    Real Estate Consultant · Colorado Springs, CO · Member since 2014 · 86 posts · 64 votes
    3y

    @Courtney Nguyen DM sent, thanks!

    0Reply
  • Courtney Nguyen
    Spring, TX · Member since 2017 · 138 posts · 44 votes
    3y

    @Luis Alvarez thanks so much.  I really appreciate it!

    1Reply
  • Sol Romand
    Member since 2019 · 54 posts · 12 votes
    3y

    @Luis Alvarez Hi Luis. Would love to learn more, it's great to hear insight from a new angle. Could you please share your structure with me too?

    1Reply
  • Luis Alvarez
    Real Estate Consultant · Colorado Springs, CO · Member since 2014 · 86 posts · 64 votes
    3y

    @Sol Romand Sure! I sent you a colleague request since we can't send attachments in messages unless we're "connected" 

    0Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y

    @Corey Duran

    You cannot run multiple LLC's from one bank account and think you have asset protection.

    If someone told you this I would find someone new.

    7e investments53 Reviews
    WebsiteView Page
    1Reply
  • Erik D.
    Investor · Minneapolis, MN · Member since 2014 · 79 posts · 17 votes
    3y
    I usually name them something to do with the address.
    For example "125 Main St NE" I name "125 Main St NE LLC"
    For a short term rental I do something cleaner, "1255 Forest Dr" would become "Forest Drive LLC" if the name is available. Or maybe "Forest Villa LLC".

    I've seen apartment syndicators just use numbers, so "Capital Group 1 LLC" and "Capital Group 2 LLC" and so on.
    1Reply
  • Corey Duran
    OP
    Rental Property Investor · Toledo, OH · Member since 2023 · 39 posts · 14 votes
    3y
    Quote from @Chris Seveney:

    @Corey Duran

    You cannot run multiple LLC's from one bank account and think you have asset protection.

    If someone told you this I would find someone new.


    I agree. I am looking for a different attorney to help me structure this. I am trying to get asset protection without a huge change to my admin work. So ultimately find out the least amount of bank accounts I need and whatnot. I am the sole member and operator of everything and have 14 doors. If I put each property into an LLC I do not want to have 14 bank accounts.. There has to be a better way. Also I do flips which would be another bank account and have a band I run for profit which would be another.. If you have any advice or someone to recommend I would truly appreciate it. Again I have no partners nor do I plan to have any as of now.

    0Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    3y

    Unless this is 100% only about trying to hide your identity for 1 day instead of a hour. Some people would suggest you replace all these llc’s and bank accounts with one umbrella policy and 1 bank account. 

    You are 100% not protecting the assets from a lawsuit if they don’t all have their own bank accounts. A separate bank account for the management “company” also doesn’t help. Anyone that’s hurt is going to sue the operator and the property owner. After all. If the property management company allowed someone to get hurt by their negligence, who selected them? 

    Once you put all the property owning llc’s in one bank account that means if any property owning llc is sued and loses all the other property owning llc’s who share that bank account also lose, so there’s goes all the equity in all the properties. 

    Ps. You accidentally hit/kill someone in a car accident, pool incident, dog attack, etc etc. You lose everything that way too. 

    I don’t see what you get out of this other than complexity and expenses. Sure maybe someone else gets to retire early or send their kids to college off your extra work but you could just write them a charity check instead. 

    Let’s say you own 20 properties worth $500k each ($10 million) with 20% equity in each ($100k x 20 or $2 million). Get a $2 million umbrella. For less than $2k/yr you protect the properties and yourself. Plus if you’re ever sued you have an insurance company providing a lawyer that wants to prove you’re not guilty. That alone could pay 10 years of premiums. 

    0Reply
  • Soh Tanaka
    Property Manager · Lindenhurst, IL · Member since 2016 · 854 posts · 506 votes
    3y

    I think for 14 doors, it's better to start simple, and then as you grow, add more layers. To have 14 LLCs for 14 doors seems too many to me unless each is a very expensive property. 

    0Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    3y

    The #1 reason we use LLC's is anonymity with tenants. Too many crazies in the world today with guns, so want to make it hard for them to find property owners.

    [email protected]248-209-6824
    Logical Property Management4.9459 Reviews
    WebsiteView Page
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free