Legal Question in Business Law in Iowa

My brother and I are looking to start a small business. We will be creating an LLC for the business but would also like to create a separate LLC to "own" the business LLC. We are doing this for a couple reasons:

1. We may have other businesses in the future and would like to have an "umbrella" LLC to own the others.

2. We are hoping to create some privacy to the actual business LLC. For example, the main LLC "Smith Brothers LLC" would own the other company instead of us personally owning the LLC.

I would appreciate any advice or suggestions on this legal structure and how complicated it is to organize.


Asked on 5/23/10, 5:15 pm

1 Answer from Attorneys
Robert Luedeman solo practitioner

You could do that, but what I think you're trying to do is erect an opaque barrier between yourselves personally and any potential financial liability you may incur.

If you plan on paying your bills and you act like a company you'll be fine with 1-if you have a need for a holding LLc at some future time you can do that if and when it is needed.

If a potential creditor asks you to sign a personal guarantee of liability for credit extended, that'll trump any number of corporate shields you choose to erect. Likewise, if you do not act like a corporation the corporate shield will be naught but a leaky sieve.

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Answered on 5/25/10, 11:39 am


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