QUESTION
Can an operating company have the same LLC member/managers as a separate LLC company that holds the land and large assets leased to the operating LLC?
Asked on Apr 01st, 2020 on Business Law - Arizona
More details to this question:
I am a managing member of a startup farm enterprise that has created an initial LLC. We are interested in creating a separate LLC to utilize as a holding company for the land and large assets that would then be leased to the initial LLC which would function as the operating company. We are a small company of only three members who are also owners, I will be the primary employee of the operating company for the first year of operations until more employees are necessary.
1 ANSWER
There is no reason that an operating llc can't have the same members as a holding company llc. They often do, in an attempt to minimize potential liability for any particular project. For example, real estate development businesses often form new entities for each new project. To avoid shared iability, though, you need to operate as if the entities are separate and acting at arms' length, for example charging market rate rent to the initial llc.
Answered on Apr 02nd, 2020 at 9:53 AM