Multiple company names with one tax id?

[smsystems]

Hello all. I am new to the forum and need a little advice. I am also new to business ownership and was sort of hurled into it (a story for another day).

Currently we have two companies. One is a contracting company that serves only Seattle and the state of Washington. The other office is supposed to serve anything outside of Washington and it's the one we refer to as the 'home office'. The Washington office is shown as a sole proprietorship while the other somehow was written up as a partnership. Both share the same tax id. Each has a different company name.

This configuration is causing us to have to carry two insurance policies, two bank accounts and so on. We are very small (in start-up) and need to conserve all funds possible of course.

My questions to all you seasoned business owners are:
What is the best way for me to combine these companies without changing company names for either one?
How can it be set up where one insurance policy covers both businesses?
Since I have a 'partner' in all this, do I need to set it up as an LLC?
Is it possible for one bank account to cover both businesses?

Thanks in advance for any help as my head is spinning from information overload!!

[Business Attorney]

There is no particular reason that you can't have multiple businesses (with different names) operating under the same entity. You just need to file the appropriate assumed name (DBA) filings so that they are identified correctly. However, putting both businesses in one entity means that the assets of both businesses are exposed to the liabilities of the other business.

It sounds as if you really have a partnership that includes both, even though you "The Washington office is shown as a sole proprietorship while the other somehow was written up as a partnership." I don't know what you mean by the phrases "shown as" or "written up as."

How was the SS-4 (to obtain the FEIN) filled out?

Two entities CANNOT have the same FEIN. The IRS is likely to consider this one entity.

A business with a "partner" (why the quotes, by the way??) can never be a sole proprietorship.

In the construction business, you should almost certainly have an LLC (or two). Organizing as a partnership exposes each of you to all the liabilities of the company. Hopefully your insurance is good enough to protect you, but why take that chance?

[smsystems]

Thanks David. When I said 'shown as' and 'written up as' I was referring to the Business Licenses for both companies. Washington business license is sole proprietorship and Tennessee license is partnership. The SS-4 was filled out as a partnership.

I only put the quotes on 'partner' because he is not officially on any of the business paperwork anywhere. I have provided all finances for the companies so far while he has a whole lot of the brains! He is convinced that his credit situation may affect the company and doesn't yet want to be shown as an owner.

We do have two insurance policies, each with a 2m dollar liability.

This business was formed in a hurry in order to keep a couple of large clients that I have. Now I am back-tracking trying to make sure that I did everything right before we experience much more growth.

[Business Attorney]

First of all, if I were putting up all the money for a new business, I would do nothing that indicated a partnership existed until I had worked out with the "partner" exactly what it meant. That means all of the things covered by a well-thought out partnership agreement or operating agreement, in the case of an LLC: rights, duties, economic arrangement, buy-out provisions, management, etc...

Second, I would certainly never go into a general partnership with anyone. I can understand someone deciding that they don't need a limited liability entity if they are on their own and are comfortable operating as a sole proprietorship because they understand the risks. As soon as you have a co-owner, your ability to assess the risks rises to a whole new level. Given the alternatives available today, I think a general partnership is clearly the worst choice for almost any business.

Whether the entity should be an LLC, an S corporation or a C corporation depends on a lot of factors, so I won't go into that, but you should consider the pros and cons of each before automatically settling on one form of entity.

You can fix your business license filings pretty easily in most cases, but to fix it you first need to decide what the entity should be.