If you wish to leave your extra money also investments within your business for many years, ‘Holding Company’ is the best of the best idea for that. Holding company does not produce goods and services. It owns other companies’ outstanding stocks/shares. By setting up a holding company you can get the ownership as well as control of many companies which commonly call as subsidiaries. Further, you will impress with the countless advantages of setting up a holding company.
Advantages of Holding Company
Tax-Free Dividends. Taxes are the huge issues to earn more profit from the business. Yet, by setting up the holding company dividends are free from tax, because these dividends are paid by operating company to holding company. So, tax-free dividends increase your profit as well as happiness.
Reduces Risk. When operating a company, you may have to get risks, such as whether you can earn profits, about your property, legal issues, and various hurdles. Yet, by setting up holding company risks are nothing. Your only risk is your invested capital. Not more than that. You are and your property in safe.
Publicity. By setting up holding company you can get more outstanding stocks from well reputed other companies. Then you own that reputation as you are now part of it. So, it’s not a waste your money.
Limited Liability. Your liability limits on the amount which you invested in the subsidiary. So, it’s limited liability. Hence, you do not want to waste your other own properties.
Can Create Corporate Policy. Moreover, holding companies do not want to interfere every subsidiaries’ managements. It can set up mutual strategies over entirely various subsidiaries. Subsequently, it helps to save you time effort.
Creditor Protection. Further, holding company can lend the money which subsidiaries pay as a dividend, on a secured basis to keep protect creditors. The loans can secure with assets of the subsidiary. Accordingly, though insolvency is occurrence company places fist place. So do not want to fear of own property and assets.
Jurisdictional Considerations. You can set up your holding company in a jurisdiction which consists low corporate tax rate while subsidiaries in different areas.
Accordingly, it’s the best idea plus does not want to hesitate to become an owner of holding company.