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Looking to expand a practice to include another service should I make it a separate business name?

I offer special education advocacy and completing a certification in college counseling wondering if I should make a new business or include under my current practice

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2 answers

A new business implies a separate registration with the state and federal government, a new IRS registration and two company entities to manage. That seems a bit laborious as opposed to simply offering a new service under the same LLC. Your company name is already out there with a brand identity. Is it not related and somewhat synergistic to your new services? Would not the new service brand benefit from the association?

If you wish to control the two services separately, many of my clients utilize a cost center approach for your type of business. They simply establish a standard general ledger accounting frame work and duplicate it twice within their accounting software, once for each service. They then roll the two together in summary fashion when regularly closing the books to get a company level balance sheet and P&L. Many available job cost accounting and related software tools offer that type of feature.

Many of my government contracting clients are required to utilize the above approach in order to separate their commercial business from their government business as they grow, insuring the integrity of cost objectives and overhead application when billing.

Looking at your profile here on Micro Mentor, you are moving from a single person operation to a growth mode involving additional personnel in the form of employees or contractors. Managing that growth with two cost centers under an existing and established company with two services brands perhaps with separate but related marketing channels would seem to be the most efficient way to manage that growth challenge.

Report Kenneth's answer

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There are certainly legal and financial aspects that would need to be considered to your question; however, I also think you have to ask yourself if there are synergies that can be had by combining the two businesses together (i.e. is the name of your current business so well known that it would give your new business an immediate bump and credibility that wouldn't otherwise be had if it were just a stand alone entity). Also, you need to think about if something negative happened to either of the business; how would that impact the other one (that didn't have the negative impact). At the end of the day, I think I'd create them separate and use marketing and social media to informally leverage one against the other to help get the new business off the ground.

Report Michael's answer

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