An LLC can be set up as a holding company. The company where the operations and business occurs is referred to as the operating company.
Holding vs. Operating Company
A holding company holds the shares and assets in the operating company. It basically leases them to the operating company for use. In this relationship, the operating company is able to purchase assets from the holding company by taking a mortgage or security in the interest of the asset.
Pros and Cons of LLC Holding Companies
There are some drawbacks to having an LLC as a holding company:
- There is complexity in the structure, creating opportunities for error.
- The assets of the companies must be separate.
- Both companies must observe being separate entities.
Limited Liability Companies (LLC’s) and Corporations are widely used entities for holding companies. A single member LLC may also be a holding company, and an LLC holding company may be owned by a trust. An example of a well-known holding company is Berkshire Hathaway, which owns assets in many public and private companies.
A holding company brings simplicity to managing business interests. In the same way a parent guides children, an LLC holding company supervises and supports its subsidiaries.
A holding company should be a clean entity with no liabilities.
Forming an LLC in Wyoming
If you want to start a business in Wyoming, the links below will get you started with the Secretary of State’s Office.
- File Your Wyoming LLC, Profit or Nonprofit Online Now!
- How to Create a Wyoming Company!
- How to form a limited liability company in Wyoming?
The cheapest way to form a Wyoming limited liability company is for a total of $125.
Offshore Companies and Delaware LLCs
That is where we form about 70% of the offshore companies we incorporate. How to form a Delaware LLC holding company? If you have any questions about forming your own companies, please contact us by phone, Skype, email or live chat.
LLCs as Holding Companies
A holding company, also called a “parent company,” is a business entity used for owning and managing other companies. Holding companies typically do not have business operations of their own. A holding company simply owns a majority interest in all the businesses operating underneath it.
When to Start a Holding Company
Businesses owned entirely by holding companies can file under one tax return, saving time and money. The main reasons for setting up a holding company are to protect assets, reap tax benefits, and have control over other companies.
Tax Implications
In most cases, the annual investment income earned by a holding company is subject to tax, which is then passed to the owners. There are several advantages to receiving investment income in this way.
An LLC can certainly be a holding company and is often the most desirable business entity.
Checking S Corp Status
If you want to know if your LLC is an S Corp, you can check your status by contacting the IRS at (800) 829-4933.
Real Estate Holding Company vs. Partnership
In forming an LLC as a real estate holding company, you are subjected to fewer taxes and awarded more deductions.
Naming Your LLC as a Holding Company
Can I name my LLC a holding company? Yes, An LLC can be a holding company, and holding companies make money when the businesses they own make money.