Business owners who already operate one or more limited liability companies or who are thinking about starting multiple businesses may ask about holding companies. In working with entrepreneurs across the U.S, my business filings company has found that various situations and factors influence
and whether they decide to pursue setting up a holding company.
Below, I share answers to some real-world questions that entrepreneurs have asked about holding companies and LLCs. For professional legal and tax guidance, business owners should enlist the help of their attorneys and tax professionals. It’s critical to get expert advice when weighing the pros and cons of the available options before deciding on business entities and how to structure them.
Choosing the right business entity types and structuring multiple businesses requires research and reliable information. When working with clients, make sure you advise them only on matters legally allowed per your certifications, licenses and qualifications. If they need guidance that’s beyond what you and your practice may offer, refer them to trusted professionals in the appropriate specialty areas so they get the insight they need to make informed decisions.
A holding company is a business entity that owns the assets of other companies (subsidiaries). Often, holding companies are established (usually as passive owners) because structuring multiple businesses in that way provides optimal tax outcomes.
Typically, a holding company doesn’t directly make or sell products or services, but it owns subsidiary companies that create or sell products and services. Even though a holding company has ownership and may oversee some management decisions of its subsidiaries, it typically does not participate in running day-to-day operations.
