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

Question

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.

Chris Seveney · Answer

@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.

Luis Alvarez · Answer

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.

Erik D. · Answer

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.

Corey Duran · Answer

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?

Courtney Nguyen · Answer

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

Sol Romand · Answer

@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?

Courtney Nguyen · Answer

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

Drew Sygit · Answer

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.

Soh Tanaka · Answer

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.

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

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