Every businessman wants to increase his or her assets and money. The latest venture of businessmen is to start a holding company to add to their assets. For those who are in the dark about what a holding company is or what a holding company does here is the lowdown.
Aim of the Holding Company
The holding company is a limited liability company, limited partnership company, or a parent company that owns enough voting stock in another company to control its management and policies. This other company may be a limited liability company, limited partnership company, or a corporation. The only aim of the holding company is to control the other company.
Another use of holding companies is to take control of property such as stocks, any other assets, trademarks, patents, and real estate. When a business is entirely owned by a holding company, we call it a wholly owned subsidiary.
Holding Company Basics
The process of forming a Hong Kong holding company begins with the submission of the application to the service provider and ends when the company is finally handed over to the businessman. Before you begin the process of the Hong Kong holding company formation find out the advantages it gives to the businessman.
- Tax consolidation benefits: If a parent company owns more than 80% of another subsidiary company, then the parent company need not pay any tax on the dividend paid by the subsidiary company.
- Protection from losses: The holding company remains protected from losses. Suppose one of their companies goes bankrupt, the parent company experiences a loss in the capital and the net worth of the company decreases. But, the debtors and creditors of the bankrupt company cannot chase after the parent company for money.
- Separate the operations: The holding company might use one of its subsidiaries to own the trademark and brand name. For the real estate, it might use another subsidiary. To own equipment, it might use another company.
- Limit the tax liability: By structuring the company suitably, the parent company can limit the tax liability. The base sections of the business on those areas with a lower tax.
Get more details from the service providers. They will tell you the process of applying and getting the holding company.
Register your Hong Kong Company
You can get the Hong Kong Company registration service providers to do the company registration for your business in Hong Kong. Getting a Hong Kong Company gives you the following advantages:
- Get an offshore bank account: You must opt for a suitable package from the service provider who will then arrange for the opening of the bank account. This package costs $600 and gives you a Company Secretary and a public phone line for your company use.
- Need not pay tax on offshore profits: This is the rule in Hong Kong.
- Low maintenance fee: The annual maintenance fee is low.
- Trust law enforceability: You need not disclose the identity of the shareholders to anyone.
- Privacy protection: You do not have to reveal the working of the company to anyone. This is the asset protection law in Hong Kong.
The idea behind both the companies is the same. They make money for their owner and they do this in style.