Can an LLC own another LLC?

It’s not uncommon for an owner of a limited liability company (LLC) to consider setting up subsidiary companies for different lines of their business. But is it possible to do that with an LLC? Can one LLC own another? And is it a good idea?

This guide walks through the basics of how and why an LLC might come to own another LLC.

One LLC Owning Another LLC

An LLC owning another LLC is perfectly legal. The LLC’s owner (referred to as a “member” in an LLC) can be one or more individuals or business entities like C corporations or other LLCs. It’s even possible to form an LLC where the only member is another LLC. 

Why would an LLC want to own another?

It’s not uncommon for a business owner to have multiple lines of business. The owner mitigates some risks by forming a parent LLC and subsidiaries (other LLCs that it owns). If one line of business fails as a subsidiary, it won’t heavily impact the other businesses. The 80% ownership test that allows one business line’s profits to be offset against another’s losses comes from the federal consolidated return rules, and those rules apply to an affiliated group of includible corporations. LLCs reach that treatment only if every entity in the chain has elected to be classified as a corporation, and where a subsidiary LLC is disregarded its income and losses already flow to its owner with no ownership threshold at all.

Any company with distinct types of businesses or business ventures with different risk levels could consider using an LLC to own others. However, states charge filing fees, and each LLC requires its own paperwork, including tax forms. Additionally, if the parent company is sued, all assets are at risk, including any LLCs owned by the parent company.

How can one LLC own another?

While it’s true that one LLC can simply own another outright, it’s much more common to specifically designate the parent company in some way. One LLC can own another in three primary ways: outright ownership, LLC holding companies, and series LLCs.

Outright Ownership

The simplest way for an LLC to own another LLC is through outright ownership in a parent-subsidiary LLC structure. Because the laws are so flexible about who or what can own an LLC, they also include business entities, like other LLCs, to be owners.

Setting Up an LLC Holding Company

A holding company, or parent LLC’s, purpose is to own other companies. With the holding company method, an owner can make separate LLCs for each line of business (see the subsidiaries definition guide for more information) and own them all under a holding company (see the holding company definition). As a general business practice, holding companies don’t actively manage their subsidiaries’ daily operations, although no state LLC statute requires that split of roles and nothing stops a parent LLC from managing a subsidiary directly.

What is a series LLC?

A series LLC is the formation of a parent company with designated separate series entries under the parent. Whether each series needs its own filing depends on the state. Some states require a certificate of designation to be filed for every series, and in those states the shield between series depends on having made that filing, while other states make a per series filing optional. Check your state’s series LLC rules before assuming one filing covers the whole structure. When someone starts a series LLC, the LLC must state in its Articles of Organization that it is allowed to form a series. However, series LLCs are only allowed in certain states:

• Alabama
• Arkansas
• Delaware
• District of Columbia
• Illinois
• Indiana
• Iowa
• Kansas
• Missouri
• Montana
• Nebraska
• Nevada
• North Dakota
• Oklahoma
• South Dakota
• Tennessee
• Texas
• Utah
• Virginia
• Wyoming

Please note that this list is subject to change; since the series LLC is a newer structure, many jurisdictions are periodically adding (or may even remove) series LLC laws in their statutes. California is unusual in that its LLC act contains no series provisions, so new series LLCs can’t be formed there. A series LLC formed in another state may still be able to register to do business in California as a foreign LLC, so confirm the current position, and any California filing and tax obligations that come with it, with the California Secretary of State and the Franchise Tax Board before relying on it. Interested business owners should verify their state’s specific guidance before proceeding.

Benefits of a Series LLC

There are a few benefits to a series LLC. The main benefit is that each LLC in the series LLC is shielded from the liabilities of the other LLCs in the series. This can especially benefit companies like real estate businesses that own more than one property and want to protect each property from the liabilities of the others.

State fees depend on where you form. Some states require a certificate of designation, and its filing fee, for each series, and skipping that filing can also cost you the liability shield between series, while other states let a single formation filing cover the whole structure. Check your state’s current fee schedule before budgeting for one fee.

DBAs versus Subsidiary LLCs

A DBA (or doing business as) name is not a separate company. It’s a name that a company can do business as that differs from the business’s legal name. Conversely, subsidiary LLCs are completely different entities.

DBA names are much simpler to establish than subsidiary LLCs. Depending on the state, it could be as easy as filing a name and paying an initial filing fee. DBAs require very little paperwork to start up, change the name of, or shut down the line of business. However, because DBAs aren’t separate legal entities, all obligations and lawsuits directly affect the parent company’s personal assets.

Subsidiary LLCs, on the other hand, are separate entities, so they require much more paperwork and administrative costs than DBAs. The owner would need to file for distinct Employer Identification Numbers, separate operating agreements, and other essential information. However, this distinction has many advantages, like sharing ownership with another company and liability protection from lawsuits filed against the subsidiaries.

How many DBAs can an LLC have?

The number of DBAs an LLC can have depends on individual state laws. For example, an LLC can have as many DBAs as it wishes in California.

Managing Taxes

LLCs have four classification options for federal tax purposes. An LLC with only one member is disregarded as separate from its owner by default, while an LLC with at least two members is classified as a partnership and generally must file Form 1065. An LLC can also elect to be taxed as an S corporation, which keeps pass-through treatment, or as a C corporation, which does not. C corporations must pay corporate income tax on profits, which are taxed a second time when distributed to shareholders.

S corporation status lets an LLC avoid double taxation by only being taxed at the individual level, but other LLCs can’t own S corporation LLCs. Federal tax treatment of series LLCs is unsettled. The IRS proposed regulations in 2010 that would treat each series as a separate entity for federal tax purposes, classified under the existing entity rules, and as of September 2026 those regulations have never been finalized. Don’t assume a single federal return covers every series; get advice from a tax professional. At the state level, the legal requirements for tax documents vary.

Recommended articles:

• Can an S Corporation Own an LLC?
• Can One LLC Have Two Businesses?
• Can a trust be a member of an LLC?
• What is the owner of an LLC called?
• Transferring Ownership of an LLC
• Can an LLC member also be an employee?

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