Ending Soon! Save 33% on All Access

What Type of Holding Company Should I Create?

By Nina Kaufman

Opinions expressed by Entrepreneur contributors are their own.

I would like to create a holding company that I can use to purchase existing small businesses. My plan is to purchase an existing "Beverage Drive-Thru" business that has been established for approximately 15 years and is currently making a profit. My ultimate goal will be to continue in purchasing small existing businesses under the holding company that I create. Which would be the best option to minimize my personal tax impact, as my wife and I will continue to work our day jobs? What other factors should we consider?

In creating any business for any purpose, you have both tax as well as legal factors. Deciding on the form of entity for your holding company depends on a number of issues.

For example, what's your personal tax situation? Do you envision bringing in other owners -- especially passive investors -- into the holding company? And once you buy these businesses, what plans do you have to continue to operate them, especially if you and your wife will continue in your day jobs?

Will you be hiring other managerial staff? Might they want stock options as part of their compensation? All of these factors, and more, go into weighing which form of entity will be right for your situation.

Another important factor to consider and you buy these businesses is your expertise in the industry. Have you had any experience in the beverage drive-through business? If not, how will you evaluate whether the current business is really on solid ground? It may be making a profit, but there could be large outstanding debts. Or erratic cash flow. Or major employee or business systems issues.

Make sure you team up with an advisor who can help you evaluate each of the business opportunities carefully so that you're not buying something without knowing what it's really worth.
 

Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under her Ask The Business Lawyer brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes the Making It Legal blog.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Business News

'Creators Left So Much Money on the Table': Kickstarter's CEO Reveals the Story Behind the Company's Biggest Changes in 15 Years

In an interview with Entrepreneur, Kickstarter CEO Everette Taylor explains the decision-making behind the changes, how he approaches leading Kickstarter, and his advice for future CEOs.

Business Ideas

87 Service Business Ideas to Start Today

Get started in this growing industry, with options that range from IT consulting to childcare.

Business Models

How to Become an AI-Centric Business (and Why It's Crucial for Long-Term Success)

Learn the essential steps to integrate AI at the core of your operations and stay competitive in an ever-evolving landscape.

Marketing

5 Steps to Preparing an Engaging Industry Presentation

You can make a great impression and generate interest with an exciting, informative presentation. Find out my five secrets to creating an industry presentation guaranteed to wow.