March 28, 2015

How a Holding Company Works

Holding Company Stock Certificate

A holding company is a type of investment company that owns other assets and investments.  A holding company itself doesn’t do anything.  It owns things.  Image © Comstock/Thinkstock

A holding company is a special type of business that doesn’t do anything itself.  Instead, it owns investments, such as stocks, bonds, mutual funds, gold, silver, real estate, art, patents, copyrights, licenses, private businesses, or virtually anything of value.  The term holding company comes from the fact that the business has one job: to “hold” their investments.

History is filled with examples of amazing holding companies, such as Allegheny, Loews, Berkshire Hathaway, The Marcus Corporation, Cascade Investment, and Walton Enterprises.  Many modern day corporations such as General Electric or Bank of America are really holding companies because they own a bevy of smaller businesses; e.g., Bank of America is actually a bank holding company, owning control of the stock of other private companies including the eponymous bank, insurance businesses, asset management companies, securities underwriters, and more.  That is, when you buy shares of Bank of America on the New York Stock Exchange, the company you are buying doesn’t do anything itself.  It is merely a conduit through which it controls and owns the stock of underlying businesses.

Personally, I like to think of holding companies as coming in two forms:

  1. Holding companies that serve as investment vehicles for investors
  2. Holding companies that serve as risk management tools for large corporations

Although they have some similarities, they are different.  It is important you understand which you are thinking about and why both types are used.

How a Hypothetical Holding Company Could Be Formed

For investors, a holding company provides the ability to make investments in a wide range of assets, including taking minority stakes in businesses. It would be easier to just provide a fictional example to illustrate how this would work.

Imagine you were part of a rich family that decides to invest together.  You think a holding company is your best vehicle so you decide to form one.  You incorporate a new business called Arlington Investment Group LLC by filing the documents with the Secretary of State and paying a lawyer to draw up the operating agreement, all of which costs less than a few thousand dollars (and it can even be done or less than $200 if necessary).

There are 10 family members, each of whom writes a check for $1 million to the new holding company’s bank account in exchange for 10% ownership.  Once everyone’s contribution is received, the holding company has the simplest balance sheet in the world:

Assets: $10,000,000
Liabilities: None
Member Equity (Book Value): $10,000,000

I’m going to show you how the holding company could use that $10 million to control $500 million or more without a lot of risk.  This is an extreme over-simplification but the idea is to teach you how holding companies work so we can ignore the details for now.

Holding Companies Allow for Structural Leverage Opportunities

First, say the family decides they want to build a $6 million apartment building in town, but they only want to invest $1 million of their own plus receive a management fee.  The new holding company is the perfect way to achieve this.  They create a new company, Oak Lane Apartments LLC, and contribute $1 million in cash and write the operating agreement so that other investors can buy $2 million in ownership (2/3), and the bank can provide $3 million in debt financing through a secured non-recourse mortgage.  The operating agreement requires that 5% of rents be paid to a business called Arlington Property Management LLC, which is another new subsidiary the holding company formed.

In effect, the family is using only 10% of its assets, or $1 million, to control a $6 million apartment building.  They are receiving 33.33% ownership in the building, plus 5% of rents, giving them a form of “synthetic equity”.  But if they wrote it correctly, they would only have $1 million at risk.  They have achieved 6-1 leverage with a relatively small amount of debt; it is the structure that did it for them.

Then, they could start making investments in other companies, taking minority stakes in businesses, buying stocks, launching new companies, etc.  They could even create a mutual fund adviser and manage hundreds of millions of dollars on a tiny investment, earning fees on that giant pool of capital.

Sample Holding CompanyThe result is, the family is now controlling more than half a billion in assets, with very little risk to itself, on only $10 million.

Assets In a Holding Company Can Be Put in “Silos.”

Just as important, if one of the investment fails, the others are isolated. Say the Arlington Property Management LLC business had an employee embezzle all the money and it went bankrupt.  The parent holding company could put it into receivership, create a new property management group the next day, and the only loss would be the $100,000 they put into the business to get it off the ground.  Their investment in the chocolate candies company, the mutual fund adviser, and the apartment building itself were beyond reach.

Money managers often refer to this as putting assets in self-contained “silos” because if one is destroyed, it burns to the ground in the middle of a field without taking down anything else of value.

Consider Dunkin Donuts.  It is actually a holding company.  All of the intellectual property, such as the Dunkin Donuts name, logos, etc., are owned by a subsidiary known as DD IP Holder LLC.  Take a look at the side of one of the cups …

Dunkin' Donuts Holding Company

Get it?  It stands for Dunkin Donuts Intellectual Property Limited Liability Company.

This subsidiary will license the brand name assets to the franchisees or company owned locations.  They may hold the real estate in another subsidiary, which rents the storefronts to the business.  They may have the equipment owned by another company that leases it to the business.  Then, they may have the actual operating company that sells the donuts called “101 Main Street Donuts LLC”, but it is paying fees to the other subsidiaries to rent the Dunkin’ Donuts name, rent the real estate, rent the equipment … you get the idea.

The result is, if someone walks in, falls, sues the company and bankrupts it, only that location that operated is going down.  Within 30 seconds, a Dunkin Donuts could open a new restaurant at that same location called “101 Main Street Donuts Version II LLC”, with the sister subsidiaries leasing all of the assets right back to it.  The person who sued may walk away with little or nothing.

To put it another way, if you were going to own a manufacturing business, you might consider creating a parent holding company structure like this:

  • Acme Factory Holding Company LLC
    • Acme IP Holder LLC (brand names, trademarks, etc.)
    • Acme Real Estate LLC (the building and real estate)
    • Acme Equipment LLC (the equipment)
    • Acme Human Services LLC (the employees)
    • Acme Manufacturing LLC (the operating company)

All of the subsidiaries would be owned by the holding company, but Acme Manufacturing LLC would be the business in the traditional sense.  It just that it would pay a fee to lease employees from the human service subsidiary, equipment from the equipment subsidiary, the building from the real estate subsidiary, and the brand name from the IP Holder subsidiary.  If an employee sued the company, only the human services business would be at risk.

A lot of multi-national mega corporations use this structure and then have the IP holders located in very low tax rate countries because the income paid to it by the operating companies, which may be in high tax rate areas, will be charged a lower rate.  Bloomberg ran a story today about how Google had gotten its tax rate down to 2% or 3% in some jurisdictions by using companies in the Cayman Islands and Ireland.  Imagine that Dunkin Donuts charged each location $100,000 per year to use the name, shoving all of that income in the DD IP Holder LLC subsidiary, which may be in the Isle of Man.  This is why the big accounting firms can be so lucrative.  People who do this stuff and know the tax code spend their whole lives studying.

Likewise, British American Tobacco has an entire page of its massive major subsidiaries.  It would be almost impossible for someone to bankrupt it unless they went after the parent holding company.  You couldn’t just sue the local cigarette factory.  It’s like a lawyer’s dream.  Keep in mind, each of these main subsidiaries may have dozens of subsidiaries of their own.

British American Tobacco Subsidiaries

Now, to be perfectly clear: The rules are so incredibly complex that this is just a theoretical, incredibly simplified broad overview example of how something like this would work.  It probably wouldn’t be worth the effort to setup a structure that complicated unless your business were generating massive annual profits.  In most cases, a guy running a little bakery in a small town is going to be covered by his insurance policy.  To him, the odds are good that a holding company would be an expensive, mind numbingly painful paperwork nightmare.

Transferring and Pooling Assets Through a Holding Company

Another big advantage of a holding company is that it allows families to pool their assets or transfer wealth in a far more efficient way.  Imagine trying to give shares of each of the above businesses to dozens of grandchildren.  It would be a logistical nightmare.  With a conglomerate structure, you could just issue shares of the holding company to your grand kids and they would indirectly own part of everything.  They would only have to deal with one tax filing, one stock, and one shareholder meeting.  Plus, you could write the holding company operating agreement so that you retained 100% voting control.

Holding Company Taxation

It is extremely important that you use the best, most respected and most qualified accountants, attorneys, and advisers because the rules surrounding investments can be complex.  In the case of taxes, there is a special holding company tax that is only applied to regular c-corporations in the United States that have 50% or more of the stock held by 5 or fewer investors!  It is a double-digit surcharge tax that could be devastating to your profits.

That is why so many families seem to be opting for holding companies structured as limited liability companies, also known as an LLC, or limited partnerships, also known as an LP.  You can elect pass-through taxation, just like an old-fashion partnership, so that no holding company tax should apply.  Each partner reports his or her share of the pro-rata gains and losses and pays tax on their personal filing with the IRS.

For regular c-corporations, it is important that the holding company own at least 80% of the outstanding stock because then it won’t be double taxed on the dividend distributions from the subsidiary.  That is, if your holding company owns 65% of a business, and it pays dividends at Christmas, you would owe regular corporate tax on those dividends.  If you owned 80% of the company, though, you would not have to pay corporate tax on the dividends because it was already taxed once at the subsidiary level.

The Reason Tycoons and Investors Prefer Holding Companies

In addition to all of the above reasons, a holding company is often the preferred vehicle of a true investor because it allows you to open an office and have that office devoted to nothing but finding places to put your money to work.

Once you have the capital, all you need is a good fireplace, some nice paintings, a cup of coffee, and a stack of annual reports. Or, if you’re Walter Schloss, a desk next to a water cooler in a space the size of a closet.

You show up each day, try to do intelligent things, avoid stupidity, and keep costs low.  As I’ve said a million times, compounding will do the rest.  You can pay yourself a salary and watch your net worth, through the holding company’s book value, grow higher each year if you run it well.

Holding companies are as diverse as their owners.  Some specialize in hotels and other real estate, some own restaurants, some build coffee shops, some invest only in publicly traded stocks, others focus on making investments in high-tech start-ups, some fund movie projects, while still others acquire silver mines or mineral rights.

The point is, a holding company is worth too much effort and doesn’t provide enough benefits for most small investors.  You should never add an extra layer of management unless it is necessary.  There are some expenses involved, such as preparing another set of tax returns, that must be taken into account.  If those are even a rounding error, you probably should wait until it is going to be worth the expenditure.  You should never want a holding company simply for the sake of owning one.  They have very specific purposes.  An exception might be a family who has a few hundred thousand dollars and wants to invest together through a single entity.

Summary of a Holding Company

A holding company:

  • Is any regular corporation, LLC, or LP that owns investments in other companies but doesn’t engage in any operations itself. That is, Berkshire Hathaway is a holding company because it doesn’t do anything.  Instead, it owns 100% of the stock of GEICO, which is an insurance company.  It owns 80% or 90% of the stock of Nebraska Furniture Mart, which is a huge furniture retailer.  It owns more than 8% of the stock of Coca-Cola through its insurance holdings.  But Berkshire itself just has a handful of employees and a bank vault full of stock certificates.  That is it.  Any money it has comes from dividends paid by the subsidiaries on June 30th and December 31st of each year.
  • Can be used to silo investment assets and protect them, such as Dunkin’ Donuts putting its intellectual property into its own LLC.
  • Can be used to transfer wealth to friends and family. If you own a collection of businesses, rental properties, or other valuables, it is far more convenient to transfer shares in a parent company than it is in each individual asset.
  • Can permit you to structure deals so you control far more money than you otherwise could afford. If you had $10 million and used it to buy control of a $20 million insurance group that had $70 million in float, you would be controlling $70 million from your holding company.

In essence, a holding company is in the business of providing capital and people.  That is it.  Some don’t even do that (Berkshire Hathaway refuses to provide management to the subsidiaries it purchases; they don’t run businesses.  General Electric, on the other hand, is one of the greatest machines of all time and can have someone else running a company within 12 hours.)

I hope that helps you understand the concept and why they are so useful.

  • lilly

    What a great article, thank you for sharing.

    • Joshua Kennon

      I’m glad you found it useful =)

  • Nalron

    I’m trying to start a holding company LLC, and this wonderful amazing article just inspired me to go for it. Thanks for the information and encouragement, if the big guys can do then so can I. The Walton article is so inspiring also.  Love it!!
    PS. I bookmarked this page Mr. Kennon

    • Joshua Kennon

      Thank you.  Welcome to the site!

  • Sean Leder

    do you have a clean copy of the Arlington Investment Group org chart that you could send out….had trouble reading the notes…thx

  • k-pra

    Good article.. one question. I am thinking of using a holding company to take a more strategic view of my business investments and also limit risk exposure. In this case do you think it is worth having a dedicated holding subsidiary that employs staff to oversee the holding company (eg Arlington  Holding Management LLC, or something) so that the holding company never has employees which obviously come with risk?

    • Gilvus

      It depends on how much extra overhead you’re capable and willing to take. I’ve also been looking into this, and it seems that in order to qualify as a personal holding company, the company’s gross income for any tax year must be 60% passive income (dividends, rents, royalties, etc.) (search for “26 USC Sec. 543″).

      Naturally, I’m eager to hear Joshua’s input on this.

    • Wil ‘Chilli’ Schock

        Not that I am an expert on this issue, but think about it for a second; The way of corporate business in the US today is saturated with hiring employees who are not employees. They are, across the board, seeming to for force employees into becoming contractors in order to get the job. Then, when they want to fire them, they just do. And then they don’t worry about paying unemployment benefits or being sued for discrimination, giving them proper severances, etc. The insulation afforded the corporation from this is significant. So if you were to have a K-Pra Staffing LLC subsidiary of the K-Pra Holding LLC company that supplied staff to manage that parent company, you may even want to make them contractors. It gets complicated, but clearly adding layers to the equation is all more doorways that someone ultimately would have to unlock to get back to the real cash itself that is what anyone is looking to protect. And of course, forming the holding company somewhere like Wyoming and not having your name associated with it in any public record, adds that much additional insulation. Depending on the level of investment we are talking about, it may even be worth it to form the holding company in Seychelles or another foreign country with laws that make law suits almost impossible to launch. So your money may be in a Seychelle’s bank, or it may be owned by your Seychelles LLC, but is actually held inside 20 different banks in the US, none of which are identifiable to anyone anywhere without paying massive court fees in advance to launch the suit, all blind and guessing at who the rightful owners of the LLC even were. Again, all levels of insulation. Do we need that many levels for a lawful business? Well, I have lost a lot of money not having a holding company to insulate my operating liabilities, so I am open to all ideas of insulation now.   

    • Jojo Florendo

      good idea!

  • Knowledge Seed

    If you are not an Accredited or Sophisicated Investor, is it against the law for you tostart a holding company that invests in privately-held businesses?

    • Joshua Kennon

      The accredited or sophisticated investor rules deal with certain types of securities issuance if you are raising money (e.g., issuing shares of stock or bonds to investors in exchange for cash or goods). I guess, theoretically, you could start a holding company with nothing but $1,000 and buy a couple shares of stock but I don’t much see the point. In that case, a simple brokerage account would have been more effective or, if you own a family business, keeping the family operating entities separately owned until the economies of scale and organization benefits of bringing them under the same roof justified it.

      • Knowledge Seed

        I have a several family members (siblings and cousins) that own a variety of businesses that, as I accumulate substantial savings, I would like to invest in.

        I was under the impression that, because I don’t meet the requirements to be an Accredited or Sophisticated investor, I can’t invest in those companies. The holding company was just a way to skip those requirements  – if possible.

        But you’re saying, whether I meet those requirements or not, I can invest in those companies without a holding company, right?

        • Joshua Kennon

          No, that is different.  You asked if you can *start* a holding company.  Sure, anyone can.  But neither you personally, nor your holding company, could invest in a private offering (e.g., private stocks or bonds) if the business issuing them only allows accredited or sophisticated investors because it is relying on something like Regulation D as a safe harbor.  You can’t get around the requirements, if that’s what you’re trying to do.  

          Technically, there are a few ways a non-accredited or sophisticated investor can buy shares of a privately held business, such as Regulation D Rule 506, which allows up to 35 non-accredited investors in an offering of private securities (reference: but a lot of smart people won’t even take advantage of that.  There is too much liability exposure if you start letting in a lot of non-accredited investors.  A few years ago, I point blank had a securities lawyer tell me that even if I loved the family member with all of my heart, it would be patently stupid to allow anyone who didn’t meet the accredited status into a business I was considering launching, even if they wanted to buy several hundred thousand dollars worth of shares.  I listened to him and scrapped the idea of allowing them in until I could come up with a better solution.  No one wants to hear, “Sorry, but you aren’t worth the liability exposure” but that is what it comes down to in the end.

          I’m not a lawyer so take this with a grain of salt, but it’s just not worth the trouble for the business owner to admit anyone, family or friend, who isn’t accredited.  No matter how hard you try, it sounds like your family members are going to find a reason not to let you invest and, frankly, they should.  They are being wise given the current state of regulation in the country.  You may not want to hear that, but the gist is, move on and find somewhere else to put your money.  It isn’t worth the trouble and it sounds like your family is trying to be polite because they don’t want to use one of the Regulation D rules to make an exception for you.  They are being rational.

  • msmbjohnson

    This is a great article! Very informative and very useful. Thanks for sharing! 

    • Obert

       wow!I have been going through all the details here and find them interesting,but,can you guys advise me ,Say one registers a holdings company without even huge amounts of monies as some statements suggest,Do you guys think its wise to start a Holdings company with a notion of raising funds for it through loans from the Banks and then Open Subsidery Companies to Operate the Businesses and pay the Dues to it as should the case be,Do you think its a wise idea?

  • Tyson

    So I’ve got a question for you, that I hope you can shed
    some light on in regards to possible conflict of interests, etc.


    Fact: Arlington Family
    runs and owns a construction company structured as a sole proprietor.

    Fact: In addition to running the construction company, they
    also own several pieces of property that they lease.

    Problem Assessment: They are currently researching changing
    the company over to an LLC for increased liability protection for all their
    assets and seeking future expansion into other ventures. If they create a holding “Arlington
    Enterprise LLC,” then create operating “Arlington Construction LLC” and operating
    “Arlington Real Estate,” can they actively manage either of the operating LLC’s? I.E. Father Arlington being the primary
    manager, bidder, operator, etc. of “Arlington Construction,” but all other
    assets remaining in the holding LLC. The
    question arises for me is does this cause a conflict of interest and negate the
    purpose of the holding & operating LLC setup if Father Arlington is also
    part of the holding LLC? My hours of
    research can’t seem to address this situation.
    Any ideas or help? Location for
    hypothetical is California. Thanks for the article and website!

    • Joshua Kennon

      There is no clear cut answer. The concern is whether or not “Father Arlington” in your question treats the company as a de facto extension of himself; that is, whether or not he “pierces the corporate veil”. That (“piercing the corporate veil”) is what you are asking me about whether you realize it or not.

      Research that phrase and you will learn everything you want to know about your question. There is no clear line. It is a judgement call when litigation arises. The safest way would be to avoid it entirely but that isn’t always practical or desirable.

      If a concern arose in that department, I would unquestionably be speaking to attorneys in the respective state(s) rather than trying to figure it out for myself.

      • Tyson

        Thank you Mr. Kennon for getting back to me. Its pretty much as you said, there isn’t an exact guideline or ruling to follow in this situation. The best answer I’ve been able to find for limiting PCV follows this:

        Abide by the rules of an LLC
        Submit all required documents (quarterly statements etc.)
        Follow the operating agreement
        Do not co-mingle personal & business assets (i.e. good
        accounting practices, etc.)
        Limit possibility of “alter-ego” accusations

        However, like you said, there isn’t a clear cut response for
        it and if this were to be happening bring in an attorney(s). Thanks again for your feedback, this was a good exercise in future planning for me.

  • phiston

    Thanks for sharing this great article Mr. Kennon. I was wondering if you can address Obert’s question from 2 months ago about starting a Holding Company through bank loans. Thanks in advance.

  • Tayler

    Hi. I really appreciate the information in this article–very helpful. Many articles discuss how to start a holding company, however, rarely do I see articles that discuss how to manage a holding company, such as the daily operations. Could you share some light on that please? Thanks so much.

  • Danesh Narayanan

    Hi..Great article..thanks for the info..I have an excellent investment opportunity to invest in agricultural land. Iam planning to invest my own funds and also use funding from a couple of my friends. Is it advisable for me to say start a Holding company in an offshore country, pool in the funds, then start a locally registered company in the country where we plan to invest, and the holding company buys the shares of this I getting your point right..Would appreciate your advise..Tks Dan.

  • Andrew Knight

    Wow, amazing site, amazing article amazing everything. This is the best read regarding this topic I have ever read. Now I have a question. I read the article and I understand you pointed out not to start a Holding company just because you want to or unless you have a lot of funds to manage. But what about starting one for security of assets and planning for the future? I’m not a big wig or in any of those categories, but I’ve always been fascinated about Holding companies and how they can be used to own/invest in other assets, companies, stocks etc…but never really understood at what additional cost to me I guess. But it’s something I’ve wanted to do for the long haul, thinking ahead for the future just trying to put things in place. I know most of the big guys do it, so I guess my question is, is it just for the big guys, is this something to do as planning for the future going on the assumption that I’ll have successful investments and ventures?


    I am extremely glad to have come across this well laid out article, I shall be forever grateful to you Joshua keep up the good work

  • Dyan

    Great job!!

  • James Smith

    Never invest in any idea you can’t illustrate with a crayon. -Peter Lynch.

    Too many parts to be able to put something like this together. I could see me making the lawyer and accountant rich and me being broke because I cant figure out who gets what. On to a new plan.

  • Wayne

    Inorder to attract investors to new business opportunity if we formed a group of construction planning, designing company, general builder, heating and air, electrical etc. Would this new formed co-operation of individual companies become a partners in a holding company. Or is there a different entity formed by co-operations. If the group decided to build a medical building and wanted to invest into the a medical building to sale or rent. Would a holding company be a proper entity to offer stocks to outside investors.

  • Fab

    formed a c-corp and I have a real estate llc. I am partnering on a restaurant deal and will be creating another llc to operate it. The c-corp was set up to “own” both llc’s and large amounts of income from coming onto my personal tax return.

    My question is, how do I make the llc’s subsidiaries of the corp? I’m assuming you change the ownership of the llc’s with the state, update the ein’s and also update the operating agreements….to reflect only the corp name and info (100% real estate llc, 50% restaurant llc)?

    Also, I would like to know how to handle future income of llc’s….does the money go straight into the llc account then get disbursed at intervals to corp, or does it go directly into corp bank acct as it’s made.


  • Fab

    I know this is an old article…but, I understand how to set up companies…I just formed a c-corp and I have a real estate llc. I am partnering on a restaurant deal and will be creating another llc to operate it. The c-corp was set up to “own” both llc’s and large amounts of income from coming onto my personal tax return.

    My question is, how do I make the llc’s subsidiaries of the corp? I’m assuming you change the ownership of the llc’s with the state, update the ein’s and also update the operating agreements….to reflect only the corp name and info (100% real estate llc, 50% restaurant llc)?

    Also, I would like to know how to handle future income of llc’s….does the money go straight into the llc account then get disbursed at intervals to corp, or does it go directly into corp bank acct as it’s made.


  • James Smith

    Ok maybe I made the wrong comment. Let me try again:

    Lets say you are new to this concept and will need help along the way. Where does someone with no investment dollars find the resources to compete with lottery winners and athletes who can afford to #1 Put up their own money and #2 hire an superstar advisement team to look over virtually every aspect of their holding company portfolio(s).i.e. tax accountants/attorneys, management firm, numbers crunchers, researchers the whole gamut.

    Lastly, Joshua whats your background. i.e. Business MBA grad, math major, financial planner?
    What resources do you recommend?

    A great cheat sheet would be to just give out stock to talent but there is that thing of not knowing( how much to give them in i.o.u.

    fast track help would be appreciated. GULP, HELP!!!

  • Abdi

    Informative article. Thanks. Now my only question is can i form the subsidiary before the holding company? @CabdiSomali

  • Prashant

    Wow that was incredibly useful. Thanks!

  • Ronald Ragan

    After hours of research(I might be wrong), in order to avoid personal holding company tax( c corp) is to have 12 or more share holders with equal shares. So no 5 share holders or less will have more than 50% interest of the company.
    Also have not found any information regarding multiple C corporation to lower tax bracket.
    So for 12 people, they can form multiple Whyoming C Corp and pay 15% fed tax and reinvest their profit forever(the tax bracket will be raised in future time when profit increased which would be another research.)
    The purpose of this is to grow dividend investment with minimun Fed tax and zero state tax.

    For controlling purpose, one can have a master LLC lending $$ to them and defer/arrange interest payment.

    Please correct my rookie plan.

  • Marilyn

    This was very interesting. I am wondering if this is the correct business structure to setup. I have come up with a name which is the Brand Name for business 5 different business that wants to be under the umbrella brand but will still have their own name. Its the link to bring all the businesses together. However, the business underneath would be owned and operated by those individuals. The types of business are just services, IE health, fitness,life coach etc, People providing services not product but we all want to come together under a brand. Potentially we see bringing other businesses underneath so we have a network of trusted business to offer clients. However the brand would not money from the original service providers but if we allowed others to come under the brand, then it would have income.What kind business structure would you recommend? I was thinking its a franchise but looking at that seems really expensive when really this is just a company name that brings everyone together to provided different services. Any help or suggested on where to research would be great.

  • Mscott

    Very Helpful Josh. I learned a lot from this article

  • John Nash

    Josh great article ,do you think a holding company is best layout for small chemical company that deals with toxic product or stand alone LLC in case of legal problems? About 2-3 million dollar business

  • Legaci1

    If someone already owns companies, can you create the holding company afterwards or must the holding company always come first?

  • Saleh Adel

    thanks a lot :)

  • lillianwalker789

    For Investors, a holding company provides the ability to make investments in a wide range assets,including taking minority stakes in business.

  • mwaka

    It a great simplicity of what a holding is and very clear and simple to understand what it is.

  • Raylan Smith

    Great article…explanation and example is perfect and simple. I know what I want to do but waiting a couple of years may be best to ensure a significant benefit. THANK YOU!!

  • ryan

    i want to start a holding company in CA, to just hold stocks/options/funds/etc. I want it to be owned by my wife and I, which type do i open? an LLC, LP, LLP?? i want us to share equally but for no shared liability to be help, i.e. if she got sued by someone then my stake isn’t at risk and vice versa. thank you

  • Havoc Wreaka III

    Finally understand everything

  • Alfred

    I am a SME investor already but want to start my Holding company soon, really enjoyed the article. Thank you Joshua Kennon….are you on twitter so I can follow?

  • sebastian

    wow thanks a lot, I’m from SA and your article has really given me closure on what route to take.

  • anonymous_economist

    Question: If an LLC operating as a holding company of real commercial property uses your identity without your permission or knowledge to list you as a member and sends you monthly checks for about $6,000.00, what legal recourse would you have to protect your identity and stop the LLC fraud. This has actually happening at this time.

  • JB

    Great article! Thanks for making it understandable to the layperson.

  • mohamedalthaf

    very well explained, easy to undesratand .thank you

  • HB

    Can my holding company own 100% equity in XXXXX, Inc. which I am also the founder/ceo? Or would I need to appoint someone else?

  • Luis

    hallyburton be considered a holding company

  • Nick

    This is a great article.c: Easy to understand the concept. Thank you.

  • equityshark

    Well-written and conceptually sound. Great insight, glad I rolled across this thread.

  • Daniel Lee

    great information for those who are thiking to start HC

    • geraldine

      Okay, my question leads elsewhere. If you think you have been bilked, how do you recover your $50,000.00 from a holding company?

  • Ronald Ragan

    Was trying to form a 10 person equity holding company to grow my money. Found out, jut buy BRK and save all the troubles. Problems solved. One can also buy SP500 etf, but need to pay tax on 1-2% dividend payout.

  • Jojo Florendo

    Thanks for this article, I’ve learned a lot.


    Thanks, I found that very educational.

  • BenjaminButler

    Thanks a bunch. this article has really helped a lot. i actually read it all the way through too.