At some point in your business journey, you might consider expanding your portfolio by launching additional businesses.  

There are plenty of things to consider when planning to operate multiple businesses. We’re often asked if it’s possible to run multiple ventures under a single company structure rather than establishing separate companies for each.  

While it’s certainly possible to do (and doing so can provide certain administrative benefits), this approach brings additional complexities, so it’s important to thoughtfully consider the pros and cons before you dive in.  

In this article, we’ll walk you through the key considerations to help you make an informed decision that aligns with your goals.  

What does ‘running multiple businesses under one company’ actually mean?

This refers to having multiple distinct business activities or brands all operating under the same legal entity. Although the businesses may seem separate on the surface, they’re united under a single ownership structure.  

What does ‘corporate personality’ mean?

Once you’ve registered a company, it gains what’s known as a ‘corporate personality’. This means your company is recognised as a separate legal entity that can own assets, incur debts, enter contracts and be held accountable for its actions, separate from the personal affairs and liability of the owners and directors. 

With a corporate personality, you can operate multiple trading names or businesses through a single company registration. Your Pty Ltd company would be the overarching owner registering various trading names for the different ventures.  For example, you could have one company called Business Ventures Pty Ltd trading as both Coffee Corner Cafe and Event Hire Supplies. 

Benefits of running multiple businesses out of a single company

There are plenty of administrative and cost benefits to running multiple businesses out of one company. Here are some of the pros of this structure:  

  • Simplified legal, financial and administrative processes: By operating under one entity, you avoid the costs and complexity of setting up and maintaining multiple companies. Things like tax compliance, record keeping and reporting become more streamlined. 
  • Shared resources: Employees can work across different ventures without needing separate contracts. This flexibility is particularly beneficial for businesses with fluctuating staffing needs. 
  • Combined financials for tax purposes: When it comes to taxes, the net profit (or loss) from all activities is reported together, which can sometimes lead to tax benefits, particularly if one venture realises a loss and the other a profit. 
  • Increased market presence: You can market your different ventures under their unique trading names, potentially giving you greater market presence and brand distinction. 

Challenges and downsides of running multiple businesses out of a single company

Despite the benefits, this approach has its challenges. Here are some of the downsides:  

  • Complex financial tracking: It’s crucial to set up your accounting system to clearly report on each business activity. If you’re less than meticulous about record keeping, it can be tricky to understand the performance and value of each business.  
  • Complications with business sales or investment: Selling off a part of the business or bringing in an investor for one segment is more complicated since the company’s assets and operations are intertwined.  
  • Increased risk exposure: If one business faces financial trouble and goes into administration or liquidation, it can affect all operations under the company. Poor results in one area expose the company and its assets overall.  

Making the best decision for your business

Ultimately, there’s no right or wrong answer. The decision really comes down to your long-term strategy. 

Here are a few questions to guide your decision: 

  • Are the businesses closely related, or do they serve entirely different markets? 
  • Do you plan to sell any of the ventures soon? 
  • How comfortable are you managing complex finances or potentially exposing all ventures to the risk of one failing? 

An informed decision is critical. Weighing up the pros and cons in light of your specific situation will help you choose the most beneficial path forward. 

If you’re looking for guidance on navigating business structures, our team of expert business advisors is here to help. Contact us on 03 5221 6399 or drop us an email at info@davidsons.com.au to book an appointment.  

This article was written by Director Kylie McEwan.  

Disclaimer: This information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they’re unclear as to the meaning of anything contained in this article. Davidsons accepts no responsibility for any loss suffered as a result of any party using or relying on this article.