By Hunt Demarest, CPA, Host of Business by the Numbers Podcast
You’re running a killer auto repair shop, business is solid, and now you’re eyeing location #2. Maybe even #3 or #4 down the road. Naturally, the question on every owner’s mind is:
“Do I need to spin up a brand-new entity for each new shop—or just roll it all under the one I’ve got?”
Let’s walk through the three lenses that matter: ownership, taxes, and legal.
Ownership Considerations
First things first: who’s on the title? If you and your partner each own 50% of Location 1, and you want the same split at Location 2, you could keep them under the same LLC. But if you’re bringing in a new investor, or you want a different ownership mix, you’ll need a separate entity. No amount of tax hacking or lawyer voodoo will change that—different ownership, different LLC (or corporation).
Plug In the Podcast
For a deeper dive on structuring entities and ownership quirks, check out Episode 20 of the Business by the Numbers podcast—where we unpack real-world case studies and give you the pros and cons of single vs. multiple entities.
Tax Implications
Here’s the good news: from a tax-flow perspective, having one S-Corp or two S-Corps usually nets out the same. Your combined profit just splits across more K-1s, but it hits your personal return at the same rate. You’re not buying any tax breaks by adding another entity—so think of it more like paying for extra bookkeeping and two tax returns instead of one.
LISTEN TO MY PODCAST EPISODE 173, FOR MORE ON THIS TOPIC.
Legal Implications
This is where opinions diverge. Splitting each shop into its own entity can limit liability—if Location 2 gets sued, Location 1 (and your personal assets) may stay untouched. But separate entities also mean separate insurance policies, separate bank accounts, and double the annual filings. My advice: talk to your lawyer and insurance agent. If the extra layer of protection helps you sleep at night and the added cost is manageable, go for it. If not, consider an umbrella liability policy instead.
Special Cases: Real Estate & Loaner Cars
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Real Estate: Almost always worth a separate LLC. Your shop’s building in one company, your operating business in another—no downside, potential upside on liability.
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Loaner Cars & Equipment: Tricky. Charging sales tax on rentals to yourself can add hundreds of dollars a month. And if you don’t treat those rentals at true “arm’s length,” a court could unwind your setup. Many shop owners skip the headache, rely on insurance, and keep cars in the operating company.
Combining Everything Under a Management Co.
Some multi-shop owners set up a holding or management company above their LLCs. Pre-2018 tax law made this popular for benefits and life-insurance strategies, but today it’s niche. If you do go this route, keep ownership consistent and remember: more entities = more admin, not necessarily more protection.
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