What is a Holding Company?
A holding company is a parent or a mother company holds other entities, and can be a Corporation, Limited Liability Company or Limited Partnerships. It holds or owns enough voting stock in another firm to control management and operation.
Can a corporation be a Holding Corporation?
The corporation is one of the business structure utilizes to conduct business. It is registered with the secretary of state or a division of corporations. The corporation has stockholders and maintain it as per the bylaws. A corporation can also hold a corporation as a stockholder instead of a person.
Corporation Serving a Member of an LLC instead a Person
- A corporation can be a member of an LLC. This allows you to create an additional level of ownership, which is designed to create an entity that can offer such traditional fringe benefits,such as retirement plans and an additional level of protection from liability.
- It is created when a business uses the structure of a holding and operating company or the corporation holds the company's shares instead a person.
- Corporation as a holding company holds all business assets and provides you additional protection.
- You must check the state requirements, you are utilizing corporations as a member of the LLC.
- You will provide the limitations and obligations of the corporation utilizing as a member of the LLC in the operating agreement.
How would profits or losses will transfer?
The holding company is registered as a Limited Liability Company will pass-through profits or losses to the corporations, and corporations will transfer to their stockholders to file taxes.
How to register subsidiary under a Limited Liability Company as a member?
- A subsidiary should be registered with the Secretary of State of a Division of Corporations as a corporation by filing an article of incorporation or a certificate of incorporation.
- A subsidiary should get an Employer Identification Number from the Internal Revenue Service.
