How to form a Holding company |  Illustration
Channel: Victor Mone
Date: 2019-07-30

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 Consider what type of company you already have, if any, and what form of holding and operations company will suit your needs.   If you are seeking a more favorable tax structure, you may consider forming your holding company in a separate state than the operating company. You should consult a business attorney for help setting up a company in another state. To maximize asset protection, you can form two LLCs, one holding and one operating company. You must create a separate entity for each, but the agent for each can be the same person - you. As long as you maintain the holding and operating companies as separate legal entities, the holding company will not be liable for debts of the operating company.  If you are seeking a more favorable tax structure, you may consider forming your holding company in a separate state than the operating company. You should consult a business attorney for help setting up a company in another state.To maximize asset protection, you can form two LLCs, one holding and one operating company. You must create a separate entity for each, but the agent for each can be the same person - you. As long as you maintain the holding and operating companies as separate legal entities, the holding company will not be liable for debts of the operating company.File a business application.
 You will form your holding company according to the state laws and the type of business you want to form. Whether you form an LLC or corporation, you will need to file registration with the state by giving the name of the business, the name of the business agent, and the articles of incorporation for your company. You should do this for your operating company as well as your holding company if your operating company is not already incorporated.  Your articles of incorporation should state the purpose of your company and its objective, the names of the officers of the company, and how business decisions will be made. Update the articles of incorporation as you make business changes.Create a bank account specific to your holding company.
 To maintain independence as separate companies, the holding company and the operating company must maintain separate bank accounts and accounting records. You should open a business account specific to your holding company by providing your new company tax ID when you create the account. Deposit all of the funds you will use to  Fund the holding company.
 To start using the holding company, you should fund the company to start investing in the operating company. The wealth of your companies should be stored in the holding company, and you can loan money to the operating company to fund operations as needed.  If your operating company was already started before the holding company, start by selling all of the valuable assets of the operating company such as land, buildings, large equipment, intellectual property, etc to the holding company by filing a transfer of assets. Keep accounting records for your transactions.
 As you operate your operating and holding companies, maintain accurate accounting records of the transactions that take place between your businesses. Separate accounting records are critical to maintaining legal distinction between the entities. The holding company must claim income for amounts it earns from the holding company in lease or rent revenue, so much as that amount exceeds the expense of owning the asset. You should keep records so that at the end of the year, you can account for all transfers that took place between your holding and operating companies.