At what point or what industry do holding companies and operating companies come into play?
Upon my searches of the interwebs for which way I should structure my business I came across the holding company and operating company strategy or method, whatever.
I suppose I should state my business intent to keep in mind while reading, I have been planning to start a lawn care (and more) business, as long as my tax return pans out and I can get a commercial lawn mower for the spring. I also want to do fertilizer, and everything, the works. Tree care and pesticide (I'm certified) and then move into winter operations if I get enough income to work with. Currently I just got a job as a handyman, so I think am actually going to start the business that way this winter. Here in the next month or so I'd like to get my business license and check out insurance.
And back to the tax structure. My understanding of this holding company stuff is that the corporation, let's say C Corp., owns the equipment, and the operating LLC's or DBA's underneath it, while the LLC's or DBA's use the equipment. That way if something goes wrong, there becomes an issue of what how to go after the contractor. I don't know what happens, but It would seemingly complicate the process on the other side, thus adding a layer of insulation on the contractor's side.
This also seems shady to a degree. Smart, but shady, and I am wondering if it is completely groovy, or is it frowned upon by anyone? Something to keep on the down low or Ok to share in casual conversation.
What I am thinking is setting up C corp, then opening C Maintenance LLC, C Lawn LLC, C Snow LLC, that way the different aspects and fields of work are kind of separate... I don't know, now that I am saying it sounds stupid because that's just that much more in business license fees. Is there any advatange to doing this? Or would a holding company and a single operating company apply at all?
I put this under LLC because unless I get some answers I am probably going to just go LLC to start with and then see if I can complicate things later. As I read about this stuff, the reason I am interested in going corporation is because of the tax benefits at a certain point. I just know how hard it is for new business to get off the ground, and I figure if I can make the best decision regarding taxes, then that would ensure my business' success....
Anyway, thanks for any feedback. Also, with what I have asked, unless you can answer everything completely, would you be able to recommend what kind of professional service I should be seeking for consultation in this matter and what kind of price range I might expect to see....?Or any websites or book suggestions, I like to read.
as a final note, the only other thing I can think to do is do this in stages. I haven't got the numbers fresh in my head, but I think corporations taxes are higher. So at first while the business is starting, go LLC, then as I get income and everything starts coming together, restructure at the best point in time to take advantage of any tax tricks or something.
Last edited by majik_420 : 12-07-2016 at 09:32 PM.