Legal Question in Business Law in California

Re: corporations & dba

It is legally permissible, but not necessarily the best idea. Having all 3 businesses under one roof might be a tax/accounting nightmare. Any employees you have would all have the same employer regardless of what they were doing for you.

You would also be putting all of your eggs in one basket from a liability standpoint. If someone was injured at the gym for example, the assets of the other two business would be at risk because all of the corporate assets belong to one entity. Separate corporations would allow you to keep the liabilities and obligations of each operation separate.

Re: corporations & dba

Yes, it is possible under one corporation, as long as the corporation properly documents the various decisions and authority to do so. You should never run such businesses other than as a corporation, for liability reasons. You will need to involve your tax adviser in this decision, to determine the best corporate form for your needs. Feel free to contact me if serious about setting up correctly.

Re: corporations & dba

It's not only legally possible, it's done all the time. Divisions of large corporations making different products or performing different services are sometimes set up as subsidiary or sister corporations, but by no means always.

As a practical matter, however, you need to weigh the loss of legal insulation from liability against the relatively small savings in initial start-up costs (a few hundred bucks) and annual franchise tax ($800 and up).

As far as the cost of keeping books and records and filing tax returns goes, there may or may not be net benefits from having a single corporation; it probably depends upon how much the operations are separate now and in the future.

Combining the activities in a single corporation might produce an income-tax saving, but perhaps the same effect (offsetting the earnings of one against the losses of another) would be obtained by having separate corporations, each of which is an "S" corporation for tax purposes.

All in all, I think I would prefer separate corporations if the businesses are beyond the infancy stage and have significant revenues.

Separate corporations might make it easier to finance or sell one of the businesses, when the time comes. If need be, you could put one in bankruptcy with little impact on the others.

In any case, whether incorporated or not, keep the businesses covered with liability insurance, especially the gym.