New web sites and corporate structure

Create one company or many for different web sites?

[diamondgrl]

I have a growing staff, and I am launching new web businesses. For reasons of legal liability, and to maintain better business discipline, I have created a separate company for each web site. Though the chances of getting sued for some of these projects is very small, overall I don't think it's such a remote possibility.

These are all significant undertakings, not 3-page throwaway sites, and their revenue potential each should be enough so that the admin costs of having separate companies are less than 1% of the total cost (and often considerably less than this).

However, creating all these companies and maintaining separate bank accounts and separately accounting for each (including indirect cost payments) is beginning to be an administrative pain in the rear and it will only get worse. We're not there yet but within a year, I can easily see having 10+ separate checking accounts, 10+ Quickbooks files, etc.

How are others handling this issue of corporate structure? Any advice?

[andye]

Hi dg,

What's the reason why you're keeping them separate?

You say:

For reasons of legal liability, and to maintain better business discipline

but I would have thought you could treat them separately in your management accounts, if you want, while only registering one limited company (which takes care of the 'business discipline' side).

Is the issue that if one of these projects goes bust then you don't want it to be entangled financially with the others?

Or do you have some other reason?

best, a.

[Alioc]

From a corporate identity point of view, your strategy is what I like and do myself. It makes each business look bigger than they really are if you indicate it clearly. Such as "A ... company" "A division of ..." That's just classy and worth the hassle I think.

PS: If you need corporate identity work, you can PM me for suggestion.

[diamondgrl]

Yes, if there is a lawsuit that affects one, it need not affect the others, unless I am not careful in keeping them separate.

The business discipline issue is mostly that having the legal necessity of keeping close tabs on each business forces me to carefully think about whether a web site is truly a profitable venture. If I end up spending 10% of company-wide effort on a website that generates 2% of the revenue, it becomes clear that something about that must change - either an expected ramp-up in revenues or decline in the effort required to maintain the site.