I have a existing LLC which I want to make a Holding Company of two (2) other companies (i.e. Record Company & Music Publishing Company) which I want to create, so how do I do this?
I was thinking setting it up as different classes (Class A: Record Company; Class B: Music Publisher), both can I separate both classes income and expenses? or is it better just to create two (2) separate LLC's and place my existing LLC as the Holding Company?
Russell D. BrownBusiness AttorneySaline, MIMI licensed ·
I agree with the previous comment that it depends on what you are trying to accomplish. You need to know how you intend to manage the separate companies, how you intend to handle your taxes, the employees (if any), and your liabilities and assets, just to name a few things.
Not only should you talk to a business attorney who does this kind of stuff frequently, you should speak with your accountant to look at the tax ramifications, especially now that we are dealing with new tax issues starting January 1, regardless of what happens with the so called “fiscal cliff”.
As for your class idea, I am not sure what you are driving at, but I assume you are talking about creating two classes of membership shares. This will not accomplish what you are trying to do at all and you may run afoul of the state blue sky laws and the SEC regs.
This is the kind of work I do day in and day out. If I can be off assistance, please don’t hesitate to call. I also know a lot of good accountants. But, as I said, you really don’t try to do this on your own unless you are a business and tax lawyer. It is really easy to screw up and you will end up paying for it at tax time or, hevan forbid, if you should happen to be sued over something in the future. Good luck.
Respectfully,
Russ Brown
Your answer depends on what you are trying to accomplish. Why do you want multiple LLCs and a holding company, in the first place? You probably should consult with a lawyer on this. It is worth paying to get it set up right, the first time.
James Frederick
I agree with Mr. Frederick. You need to define what your main purpose is : Tax Planning ? General Business Planning ? Asset Protection Planning (isolating liabilities and protecting personal assets) ? You should also keep in mind other variables as projected revenue, existing business assets.
From asset protection perspective, note that an LLC does not protect totally your businesses neither your personal assets against lawsuits .
A golden rule is to keep things as simple as possible. You want to sit down with a local business attorney / asset protecting attorney and of course involve your CPA. Good luck.
When the other two LLCs are established, you can easily make the existing LLC the sole 'Member' of both Companies - so that if functions as the Holding Company. I do recommend carefully establishing the two new LLCs with Operating Agreements that are appropriate to the company ownership you envision. I recommend you consult a Business Law attorney in Saginaw. Good Luck!
