June 30, 2015

If you tuned into yesterday’s post, you saw the basic information about how holding companies work and the general situations where they make sense for either an individual or a corporation. Today, we’re going into a little more detail about holding companies.

Many large holding companies will put the entity receiving income from subsidiaries in a country with a low income tax rate. One such example is the Isle of Man. This is a complicated process and should be handled by an asset protection specialist who can advise you about the benefits of locating the company in specific places. 

Transferring assets to others can be quite simple using a holding company. Instead of issuing stock certificates out to many separate companies, there is only one certificate that comes from the actual holding company.

The taxation of a holding company is such a big issue that is requires the top attorneys and accountants to help you put it together and manage it. If the company is structured as a c-corporation, a holding company tax can be levied if 5 or less individuals own more than half the stock. One solution to this is structuring the business as a limited liability company or limited partnership, wherein each party can select pass-through taxation and pay out on their own personal returns.

For a wealthy investors, the holding company is a great place for thinking, planning, and putting in money to do the maximum amount of good.