Corporate structuring is a term that means organizing the structures of a company. Here at Accountaxpert, we help companies use a holding company structure to help mitigate risk. We know that business owners are always looking for ways to protect their business’s assets. One of the most effective way today is to divide the business into several entities, all owned and controlled by a single holding company (holdco).
A holding company (holdco) is a parent business entity. It is usually a corporation or LLC that does not manufacture any goods or services or conduct any business operation. A holding company is holding, as the name implies, the controlling stock or the membership interests in other companies. The companies that are owned by holdco do all the operating activities such as manufacturing, selling goods and services. These companies are called operating companies (opco). The holdco can own 100% of the opco or it can just own enough stock or the membership interest to control the operating company.
Holding companies can also be used by small business owners such as a single entrepreneur. For example if a person wants to buy an apartment for the rental income. Two business entities can be formed: an LLC that would own the apartment and a parent company (holdco) that would own the LLC.