Does anyone have a Holding LLC > Operating LLC setup? And why?

[Axel Inverted]

I would really appreciate some opinions on this topic. Setting up a holding LLC that owns the assets of a business, such as an office building, and a separate operating LLC is common if you want to protect the assets of a business from lawsuits or creditors coming for your company's assets.

However, I am trying to figure out if this set up is worth doing for domains, and if it still offers the same protection. Obviously the biggest danger with domains is being sued for some sort of trademark infringement. But with domains, even if you were to lease the assets to the operating LLC to sell, wouldn't someone still be able to file suit against the Holding LLC directly, bypassing the operating LLC, since the Holding LLC is the actual registrant owner of the domain, thereby rendering the protection useless?

If so, what would be the benefits of still doing this set up and does anyone have their business set up this way? It's more costly and more complicated, and I'm trying to figure out if it's even worth doing for the rare event that something like that could happen, especially if the protection disappears entirely.

 

[offthehandle]

I am not giving legal, accounting or tax advise and suggest you get that.

If you breach a trademark, you could simply lose the name simply via a URS or UDRP. Nothing in a LLC is protecting the asset. Then if the entity suing you wants to go to court further they can if you materially benefitted somehow by using the trademark in bad faith. Such behavior gives this domaining business a bad name. Never register confusing or similar domains to major brands. Use the TESS system before registering names.

If you are a high net worth person, you should consider an LLC or offshore corp.

If your portfolio requires protection and assuming you are US based, You will find that if you study the way various high end domain sellers and people achieve this is by registering in a non US jurisdiction offshore. Depending upon your chosen jurisdiction and budget, you can create an entity, there are even Corps known as “shelf companies” you simply purchase for $3-4K, created by offshore agencies that are preregistered and ready to go. The agency at their address sells hundreds of corps and appoints all corp members from their offices such as Pres, Treasurer, etc. and you are simply the shareholder. There are annual fees involved as well as any transactional fees you incurr. This is just like the thousands in Delaware that share the same address, but offshore. There are those that have registered shares and those that are set up with bearer shares which are not registered.

This is all completely legal provided you comply with FATCA regulations that cover banking and offshore activities and file the corp forms and disclosures in your Fed taxes and with FINCEN. The benefit is if someone wants to sue or attach a lien to you, they must file locally in the jurisdiction where the assets are held, in the local language with local attorneys, which makes it expensive for the entity bringing suit against you.

 

[Axel Inverted]

I use TESS but it does not help much if there are unknown, unregistered trademarks at the federal level. There are far more trademarks in use that are not available in TESS.

Off shore businesses is an option, and something I have been looking at, but far more costly and more complicated and that doesn't offer asset protection, just makes it more difficult for small frivolous, lawsuits to take place. My second reason for wanting this is expanding into other areas other than domaining. There are advantages to keeping things under one company, such as building a history, reputation, etc and not having to start off new from scratch with each individual company. But without protecting assets, you are exposing all companies to any frivolous lawsuit against any of the others.

This isn't something that I figure I would ever run into, but you kind of have to plan for everything, including the best and most flexible business structure, well in advance, before you really ever need it.