Can A Holding Company Be An LLC - FundsNet

Last Updated: April 2, 2024 Written By:Adiste Mae

Can a holding company be an LLC? The answer is yes, a holding company can be setup as an LLC.

A holding company is a business entity, usually a corporation or limited liability company, that owns a majority or a large part of another company’s stock.

Holding companies can also own real estate property, trademarks, patents, other types of intellectual property, vehicles, equipment, stocks, and other types of assets.

Holding Company as an LLC

A holding company, also known as an “umbrella” or “parent” company, is created with the sole purpose of owning another company’s stock.

While they do not themselves produce any goods or services, the companies they own do manufacture, sell, and conduct business operations.

A holding company doesn’t run day to day operations but rather owns assets.

When a holding company is created, it is a separate entity from its subsidiaries or operating companies.

By placing valuable assets of the business, which included items like property, intellectual property, and equipment under the holding company, it provides a liability shield from creditors or possible litigation.

A limited liability company is a business structure designed to protect business owners from being personally liable for the company’s debts or other liabilities.

Owners of an LLC are known as members.

LLC’s qualify for pass-through taxation – meaning that profits are only taxed once.

Profits and losses are passed through the LLC to its members and therefore, income is only taxed once because the IRS recognizes LLC income as personal income.

While there are many benefits to forming a holding company, you can also form multiple small businesses as one company with multiple projects or you can form a seperate LLC for each company.

Forming a new LLC for each business entity is simple and still provides many of the benefits of a holding company, such a liability protection.

Most states do not restrict LLC ownership and do not require annual meetings, formal officers, or complicated records.

Furthermore, you can structure your LLC any way yiou want, with few restrictions.

There is no llc member limit which means that an llc can be setup as a single member llc or multi member llc.

Technically, one LLC can own other LLCs or shares in multiple corporations.

For more ways to strucutre an LLC, read our article “Can You have Multiple Businesses under One LLC?”

Article Sources & Citations

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1. SBA.gov "Business Structures - Limited Liability" Page 1 . October 22, 2021

2. IRS.gov "Limited Liability Company (LLC)" Page 1. October 22, 2021

3. Cornell Law School "Holding Company" Page 1. October 22, 2021