Can an LLC be a holding company?
Yes, it can.
A holding company is a parent company that owns valuable assets or other companies (known as subsidiaries). Those valuable assets can range from equipment to intellectual property, or in this case, real estate. Typically, a holding company does not conduct its own business, such as offering services or producing goods. Instead, it is common practice for its subsidiaries to carry out operations and services, especially those that are considered inherently risky, so as to protect the assets of the LLC. By implementing the holding company structure, the LLC assets cannot be sought out by creditors.
A holding company can be used for several purposes and take on different names. For example, it may be called an investment holding company, private holding company, asset holding company, real estate holding company, and more. Essentially, the holding company brings simplicity to managing differing business interests. In the event that you require further asset protection, your LLC holding company can be owned by your trust.
Choosing a limited liability company (LLC) for the structure of your holding company is a popular choice due to the simplicity and flexibility it offers. The LLC entity type has not been around as long as that of the corporation, however, every state now allows LLC formation, and their popularity has grown the world over. Because the LLC is easier to manage than a corporation, they have become the more common choice for a holding company. You may also choose to tax an LLC as an S-Corporation, which means you may have an S-Corp as act as a holding company.
There are a number of advantages that a holding company can offer. Some may be specific to the circumstances of your financial goals or business type. Listed here are three advantages that holding companies enjoy.
As noted above, LLCs can serve as holding companies. If you are forming an LLC for this reason, where you choose to register your company will impact the formation process and governance. The laws pertaining to corporations and LLCs differ from state to state. If you wish to form an LLC in the state of New Mexico, you must file Articles of Organization with the New Mexico Secretary of State’s office. The articles should include the name and address of your LLC, the registered agent’s information, and any additional member or manager information. The filing fee for Articles of Organization in New Mexico is $50. Unlike most other states, there is no annual report requirement for LLCs.
Choosing an LLC structure for your holding company is smart practice for most individuals and businesses. If you are interested in forming an LLC to serve as a holding company, consider our LLC Formation Services. Enlisting our help will ensure the proper filing and structuring of your company, so that you can enjoy worry-free asset protection.
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