J.K. Lasser's Small Business Taxes 2023

CHAPTER 28Tax Strategies for Multiple Businesses

• Advantages and Disadvantages of Multiple Entities
• When to Run Multiple Activities within One Business
• Treatment of Multiple Corporations
• Tax Rules for Owners of Multiple Businesses

Alert

At the time this book was published, Congress was considering tax changes that could affect 2022 tax returns and planning for 2023. Check the online Supplement in February 2023 at www.jklasser.com or www.BigIdeasForSmallBusiness.com to see what changes have been enacted and when they become effective.

“Multiple businesses” connotes multinational corporations with intertwining ownership of many entities. But small business owners may conduct different activities through various entities. These entrepreneurs simultaneously own and usually run 2 or more businesses. In fact, a 2022 Bank of America (BOA) survey found that 26% of small business owners had multiple businesses and of these 58% had 2 businesses and 30% had 3 businesses running at the same time.

There may be sound legal, business, and tax reasons for using multiple businesses rather than funneling all activities through a single entity. Liability issues, for example, are one good reason for operating separate activities through more than one business. This chapter focuses primarily on the tax implications of running multiple businesses.

Advantages and Disadvantages of Multiple Entities

Some activities can naturally and logically exist within a single entity. For example, ...