Should I form a separate company around each of my websites?

QUESTION:

I want to start a network of websites all with similar names and themes to sell certain merchandise.  Should I have one C-corp with all of the websites registered under it and individually trademark the sites? Or should I register each website as a different entity, even though it will be far more tedious?  As far as exits go, how will I be affected if I want to sell one of the sites, but not all?

ANSWER:

Naomi Kokubo

Naomi Kokubo

by Naomi Kokubo, Cofounder of Founders Space

I can tell you that it pays to keep things as simple as possible.  If I were starting a business, I would need a pretty darn compelling reason to form multiple companies at once, one around each website.   The fact that Microsoft, Apple, Amazon and Google can run vast business empires under a single entity speaks volumes.

Trademarking each website’s name is a good move.  It’s easy to do and great way to protect your brand.  The fact is that most startups are hard enough to manage, and I wouldn’t personally want the hassle of filing multiple tax returns and managing multiple corporations.  As far as I’m concerned, the less administrative chores I have, the more I can focus on building my business.

I wouldn’t worry about exits at this stage.  If you’re really lucky, one or two of your sites will be worth acquiring, while the others will be of nominal value.  That said, what you need to do is seek some professional advice from a good lawyer before you form your company.  Someone needs to understand exactly what type of business you’re running and how to best structure it.  A corporation may be the best entity, or it may be an LLC.   Again, get advice now and save yourself a lot of headaches down the road.   And when in doubt, think small.  You can always make it more complicated as you grow larger.

I hope this helps!

Tip: Consider using a filing service such as Legal Zoom where they file all the documents with the state, get your record book, and more.

Comments & Advice:
  1. JoseB says:

    Let's say you wanted to start this type of business with different types of websites, with no relevance to one another. Can you start an LLC and file them all under the same company name? Is there some sort of name for doing this, or is this very common?

  2. I'm not a lawyer, but I've started a lot of companies, and you can have multiple websites under a single LLC, even if the websites are totally different from one another. As for accounting, you can track their profits and losses separately, so you can see how each of them is performing.

    If you look at Naomi’s company, LavaMind (http://www.lavamind.com), there are multiple websites, each of them very different, and they are all under one company. This isn't a problem. At any point in the future, LavaMind can spin one of these websites off as its own business, if it chooses to do so.

  3. FormationGuy says:

    As everybody else has suggested it is not required for you to setup a new company for each individual website, however depending on the TLD of the domain you are after you may encounter some difficulties.

    For example in Ireland in order to purchase a .ie domain you must prove that you have a link with that domain name and show what you intend to do with it. In most cases you will be required to provide your companies registration office number and show that there is a legitimate link between you and the domain.

    So if your existing company is registered as ACME Ltd but you wish to purchase WIDGET.ie you may need to register a business name that is relevant to WIDGET’s in order to prove the link.

  4. Rao says:

    Rao says:

    September 30, 2015

    I am a US GC and working on a software product startup. I have already formed a Delaware C-Corp using http://www.incorporate.com. I also have a private limited company in India. This was created earlier. Now I wish to make the Indian company a 100% subsidiary of the Delaware C-Corp. What is the process of doing that?

    Another related question:

    The Indian company does all the product development work. The product is SaaS based and therefore will always be purchased online. It will be sold through the US C-Corp. Does it make sense to make the Indian company a 100% sub of the c-corp? Or is it better to leave the Indian company as a separate entity that bills the US company at an arms length? I want the IP to be owned by the US company, VCs will invest in the US company and the indian and US employees will get stock options from the US company.

    Thanks in advance for your advice.

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