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PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4675
Experience:  35 years tax experience, including four years at a Big 4 firm.
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I have a talent management company in Los Angeles that has

Customer Question

I have a talent management company in Los Angeles that has been operating in (a loose) partnership with another. We have mutual clients together. After three years working as Hot Rock Media (LLC)/CohenThomas Management (LLC) we're rebranding. The approved name is***** and we aren't able to form an LLC with that name, but can do a DBA. I was advised to open a third LLC which I did -- named Customer, LLC in order to open a bank account under the name The Partnership. (both of our management companies currently get checks from various accounts. If CT gets a check, with write a check to Hot Rock Media for their percentage and they do the same with us. Now I've been advised by the bank that each company - Hot Rock Media, LLC; Customer, LLC; CohenThomas Management, LLC should each have a DBA as The Partnership. What are the tax advantages/disadvantages of this? Or is there a better way to do this with the company name The Partnership (which we've already publicized) Any guidance appreciated!
Submitted: 1 year ago.
Category: Tax
Expert:  PDtax replied 1 year ago.

Hi from Just Answer. I'mCustomer I will assist.

Expert:  PDtax replied 1 year ago.

The bank is incorrect. Only one of the entities should use The Partnership dba.

If you want to have three entities, then you should. And it looks like you have the income sharing structure correct. And the LLC form will allow you to use the business as a C corp, S corp, partnership or sole proprietorship for tax purposes. You have the flexibility to take the right advice and run with it.

Using The Partnership name for a business implies it is a partnership, which you likely don't want in the event you are sued. Calling yourself a partnership implies that the business is indeed a partnership, and with it unlimited tort liability for both the business and its owners. You should reconsider this name.

I suggest revoking the dba and selecting another name you like. It might seem small now, but a lawsuit that names you individually without entity protection could be expensive to fight off. Much more than the value for use of a name.

I would also caution you to seek professional guidance in your business dealings. Banks are banks, not legal or financial professionals, and their suggestion of how you should structure your business affairs goes beyond their core competencies.

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