Setting up an LLC Holding Company can bring with it a significant tax, asset protection, and liability benefits.
However, it’s not without its drawbacks. Here are a couple of the drawbacks of forming a Holding Company:
1. Complexity:
Having different branches of your business makes the structure more complex and difficult to manage. Accounting, for example, becomes more complicated as the assets of the holding company and accounting company have to be managed separately.
2. Not entirely risk-free:
One of the biggest reasons to set up a holding company is to create a ‘liability shield’ on valuable assets by passing them over to the holding company. However, if you don’t manage the company correctly and the lines between operation and asset management become blurred, it’s possible for a court to declare the distinction false, putting your holding company assets back at risk.
You can read more about these holding company benefits here: https://cindysnewmexicollcs.com/Advantages/LLC-Holding-Company-Structure
