How to create a holding company structure?

Asked by: Hellen Balistreri  |  Last update: May 30, 2026
Score: 4.5/5 (47 votes)

To structure a holding company, you first create a new legal entity (LLC or Corporation) to act as the parent, then transfer ownership of your existing operating company (or companies) into it, making the holding company the owner of the subsidiaries, often holding assets like intellectual property or real estate, thereby separating valuable assets from operational liabilities for risk mitigation and tax benefits. Key steps include choosing a structure, registering the parent company with the state, getting an EIN, creating governing documents (bylaws/operating agreement), and establishing a board or managers for oversight.

What is the best structure for a holding company?

An LLC structure allows for smoother, more efficient transfer of assets to heirs or new owners. Streamlined Succession Planning: By holding properties in separate entities, you can transfer ownership without re-titling or the need for additional paperwork.

How to set up a holding company structure?

How to set up a holding company in the UK

  1. Choose a company name and structure. ...
  2. Register your business with Companies House by providing your company name, registered office address, statement of capital, details of shareholders and directors your memorandum and articles of association.

Can I create my own holding company?

If you participate in multiple lines of business, you could form multiple LLCs and use a holding company to own each of them. You can form a holding company the way you'd create any other type of business. Choose a location, name your company and draft corporate bylaws.

How to structure a holding LLC?

How do I start an LLC holding company?

  1. Name your company.
  2. Secure a registered agent.
  3. File articles of organization.
  4. File annual reports.
  5. Maintain company records.
  6. Set-up a bank account.
  7. File tax returns.
  8. Create an operating agreement.

How to Start a Holding LLC Company in 2025 [Step-by-Step]

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How do owners of a holding company get paid?

Owners of a holding company get paid through dividends from its subsidiaries, management/service fees, asset appreciation (like real estate or IP sold), royalties, or sometimes salaries/draws if the holding company also provides services, with payments often structured as distributions or capital gains to leverage tax benefits. 

What are the disadvantages of a holding company?

Disadvantages of a holding company include increased complexity and costs (legal, accounting, admin), potential for conflicts of interest, slower decision-making due to centralized control, vulnerability from high debt, risk of harming subsidiaries' autonomy, and complex tax implications, like losing individual exemptions, requiring careful structuring and professional advice. 

Does a holding company need an EIN?

Your holding company will need an EIN, also known as a federal tax ID number, from the IRS. This is like a Social Security number for your business—it's used for tax purposes and to open a bank account in the company's name. Getting an EIN is free and can be done online through the IRS website.

Can I run two businesses under one LLC?

Yes, you can absolutely run multiple businesses under a single LLC to save on costs and simplify administration, often by using DBAs (Doing Business As) for different brand names, but you must understand the trade-off: all businesses share the same liability, meaning a lawsuit against one can impact the others, making a separate LLC for each high-risk venture often recommended. 

How much does it cost to create a holding company?

Creating a family holding company does cost money. The filing fee to set up a family holding company is $100 for processing by mail, with an extra fee if you file online. This is a great price considering the amount of benefits of a family holding company.

Do holding companies pay taxes?

Each holding company must first be created as a distinct legal entity, usually an LLC or a C corporation. This involves paperwork, filing costs, and ongoing maintenance. Even though holding companies are normally not operating entities, they still usually have to file tax returns, both at the federal and state levels.

What are the 4 types of organizational structure?

The four common types of organizational structures are Functional, grouping by specialization (e.g., Marketing, Finance); Divisional, segmenting by product, geography, or customer; Matrix, combining functional and project teams with dual reporting; and Flat (or Flatarchy), with few management layers for greater autonomy. These structures dictate how tasks are divided, resources are used, and information flows within a company, impacting efficiency and decision-making.
 

How do I turn my LLC into a holding company?

How to Form a Holding Company: 3 Steps

  1. Form At Least Two Business Entities (LLCs) To set up the holding company structure, you will need to form at least two business entities. ...
  2. Set Up Ownership. Ownership in an LLC is established in the company's private Operating Agreement. ...
  3. Open Separate Business Bank Accounts.

Should I put my LLC in a holding company?

Advantages of a holding company

Just as forming an LLC can protect an individual's personal assets from debts incurred by their business, forming a holding company can protect a business from wider financial losses.

What is the tax rate for holding companies?

Investment Holding Company (IHC) can no longer be considered as SME starting year 2020. That means it shall no longer be kept as 17% tax rate but 24% now.

What happens if two people own 50% of a company?

Further, the majority owner will have the right to make operating decisions on a day-to-day basis for business, but the minority partner will also have veto rights over some of the most important decisions, and these will be subject to negotiation.

What is a layered LLC?

A layered LLC structure, or business entity layering, uses multiple Limited Liability Companies (LLCs) in a hierarchy to separate assets and risks, creating strong legal barriers for asset protection and privacy, like putting different properties or business functions into separate LLCs owned by a parent LLC to shield them from lawsuits or liabilities of another part of the business. It's a sophisticated strategy for real estate investors and entrepreneurs to contain liabilities, protect investments, and manage different business units distinctly, often involving a holding company owning subsidiary LLCs.
 

Is a DBA the same as a subsidiary?

Legal Entity: A DBA is not a separate entity; a subsidiary is. Liability Protection: A DBA offers no additional liability protection; a subsidiary does. Tax Filings: A DBA doesn't change tax filings; a subsidiary files separately.

What is the best way to legally structure multiple businesses?

Create individual corporations or LLCs for each business. Put businesses operating with registered fictitious business names (DBAs) under one corporation or LLC. Creating a holding company for multiple businesses.

Can a holding company have a bank account?

Opening and maintaining a bank account for holding companies isn't always straightforward. Whether your entity is managing subsidiaries, intellectual property, or investments, choosing the right banking setup is essential for compliance, tax efficiency, and financial management.

What are the cons of a holding company?

Disadvantages of a holding company include increased complexity and costs (legal, accounting, admin), potential for conflicts of interest, slower decision-making due to centralized control, vulnerability from high debt, risk of harming subsidiaries' autonomy, and complex tax implications, like losing individual exemptions, requiring careful structuring and professional advice. 

Why would someone create a holding company?

For those managing multiple ventures or valuable assets, this structure can be a strategic tool for growth, protection and long-term planning. One of the most common reasons to form a holding company is to help someone manage the intricacies of multiple businesses or investments.

Why do 90% of small businesses fail?

Most small businesses fail due to a combination of lack of market need for the product/service, insufficient capital/cash flow management, poor business planning, weak marketing, and issues with leadership or team skills, often stemming from founders underestimating costs and the complexity of running a business beyond the core idea. They often build something people don't want, run out of money by overspending or underestimating needs, and fail to adapt to customer feedback or market changes, highlighting a lack of fundamental business acumen.
 

What is better, a CC or a PTY Ltd?

There are a couple of key differences:

CCs were easier and cheaper to maintain, but had limited growth potential. A (Pty) Ltd has more formal governance and is better suited for expansion, funding, or long-term planning.