How to Create a Holding & Operating LLC
Business owners with multiple enterprises can benefit from creating a Holding and Operating limited liability company (LLC) to consolidate all of their business activities into one holding company. LLCs are legal structures that let business owners shield their personal assets from their potential business liabilities. LLCs are pass-through entities for tax purposes so no new taxation is created by running your business affairs through a single Holding and Operating LLC.
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Instructions
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Decide the state in which to form your Holding and Operating LLC. An LLC can be formed in any state, but many businesses organize their LLC in states such as Nevada or Delaware, as these states have very low filing fees and pro-business court systems. Filing in your home state is convenient, but corporate safe-haven states provide some unique benefits.
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Pick a name for your Holding and Operating LLC and file an application to form the LLC. LLC applications are filed with the secretary of state for the state you are organizing in. Typically your attorney will handle all of this paperwork, but if you want to save on legal costs and do some legwork on your own, check the website for the secretary of state for the state you want to organize in for the forms and process. You'll need to pay a filing fee with your application. Most states charge between $100 and $200 to form an LLC.
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Transfer all of your other business interests into the new Holding and Operating LLC. Consult with your CPA or attorney as to the most efficient means of doing this. Some transfer options include asset sales to the new Holding and Operating Company or simply paying all revenue from the sub-companies into the new master LLC.
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Have a management operating agreement drafted. Even if you are the sole owner of your Holding and Operating LLC, you should have an operating agreement in place. Having an operating agreement further separates the legal protection of an LLC from the liability issues of sole-proprietorships.
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Tips & Warnings
This operating and holding LLC can own partnership interests or other LLCs, but not corporations.
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