Inspired Resource LLC

In addition to Inspired Resource LLC, I have a Sole Proprietorship (SP) which was established in 2021. My goal is to “move” this sole proprietorship under the LLC. I want to do this for several reasons:

• Personal liability protection: The business owner has personal liability protection for both the LLC and any DBAs.
• Simplified compliance: There’s only one business entity and EIN to maintain. Income from the LLC and any DBAs can be reported on a single tax filing. 
• Lower costs: It can be initially simpler and less expensive than creating a new LLC for each of the small business ventures I plan to undertake within Inspired Resource LLC. 

However, you can’t just “transfer” the SP to the LLC.

Why Not?

As I was going through the process, the simplest way for me to understand it is: SP’s have their own Employer Identification Number (EIN), and so does the LLC. When you have multiple “doing-business-as (DBA)” names under your LLC, they’re each operating under that one single EIN for the LLC. The EIN is unique and represents essentially it’s own business entity, so it makes sense that you can’t operate one unique entity within another. Again, this is just my thought process so I could better understand what I needed to do next.

The steps in Illinois are to create a new DBA under the LLC, then dissolve the existing SP (as I no longer want to operate the business as a sole proprietor). There’s also a tax history already associated with my SP, and so forth, and this history will be kept separate from the new LLC. I am not a lawyer or tax attorney, but I was able to research and complete the task of adding a new DBA.

But I Want to Keep My Brand

I hit a bit of a mental roadblock along this journey to create the new DBA – I wanted to keep a DBA name “My Aesthetic Escape”. I created this DBA name when I created my sole proprietorship, and I want to use this name and branding within Inspired Resource LLC. Could I do this?

Yes! DBA’s do not need a unique name, unlike LLC’s which in Illinois must be distinct. This reassured me to continue the process as planned. For a short while, I’ll have both a SP and an LLC with the same DBA name, but only until the dissolution of the SP.

Completing the Paperwork

I completed the DBA establishment form through the office of the Illinois Secretary of State. It was easy and could be completed online. I needed my LLC name and the EIN associated with it. Filing fees vary depending on the year because the DBA name is renewed in 5-year periods; 2024 is the last of these 5 year periods, so I had a small filing fee of $30. I will need to renew in 2025 for about $150 for the next 5-year period. I received confirmation via email that my request is under review.

If you utilize a business service for your LLC, like LegalZoom or Zen Business, it’s likely they offer the service of completing the DBA paperwork for you. I suggest weighing the cost of their efforts (for Zen Business, it was $99), your confidence to do the paperwork correctly, and the bonus of having all your paperwork in one place.

Cons of Using DBAs

There are some risks for using DBAs, especially if the businesses operating under the LLC are different from each other, or the value of one is significantly higher than the others. This matters because, if a lawsuit is filed against any one of the businesses, the assets of the others could be at stake. If one of the DBA’s within the LLC were to be held liable in a suit, then so could the entire LLC and all of its assets.

This was the first step in a few to come to fully operate My Aesthetic Escape under the LLC. Up next: taxes, insurance… oh my!