How to Create a Holding Company?
1. Selecting Business Entities: The first decision is to choose what legal entity to form for the parent holding company and the subsidiary operating companies – an LLC, corporation, partnership, etc. Factors like limited liability, taxation, ownership structure, and governance should guide this choice. Using the same entity type may simplify management, but differencing can also be beneficial.
2. Determining Taxation Approach: Determine if each entity will be taxed as a separate entity or as a pass-through, based on the overall tax implications. The taxation model can be optimized between holding and operating companies.
3. Choosing Where to Incorporate: Decide which state to incorporate the holding and subsidiary companies in. Considerations include compliance requirements, governing laws, and taxes across jurisdictions. Companies can be constructed in different states.
4. Selecting the Name: Naming each entity appropriately by checking name availability and following naming conventions. Distinct but related names indicate group linkage.
5. Appointing a Registered Agent: Appoint a registered agent in each state the company operates in to receive official and legal correspondence. This could be an attorney, a company executive, or a professional third-party service provider.
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