Should I create separate businesses for different activities or use one business for multiple services?

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My answer to Should I create separate businesses for different activities or use one business for multiple services?

Answer by Ken Larson:

Many of my clients choose to use a multiple cost center approach under a single company umbrella.

A cost center is a single, pricing, accounting, and billing entity within a company, organized for a group of business lines and clients with close similarities for technical and management purposes. It has its own unique overhead rate and houses the projected direct cost labor dollar base and associated expenses for that base.

Cost centers are managed individually and then summarized at the company level to lend visibility into each cost center’s performance. This requires a general ledger set-up to do so and a management lead in each cost center.

COST CENTER STRATEGIC PLANNING FOR SMALL BUSINESS SERVICE CONTRACTORS

Should I create separate businesses for different activities or use one business for multiple services?

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About rosecoveredglasses

2 Tours in US Army Vietnam. Retired from 36 Years in the Defense Industrial Complex after working on 25 major weapons systems, many of which are in use today in the Middle East. Volunteer MicroMentor. I specialize in Small, Veteran-owned, Minority-Owned and Woman-Owned Businesses beginning work for the Federal Government. MicroMentor is a non-profit organization offering free assistance to small business in business planning, operations, marketing and other aspects of starting and successfully operating a small enterprise. You can set up a case with me at MicroMentor by going to: http://www.micromentor.org/ key words: "Federal Government Contracting"

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