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Starting a Business

What Type of Holding Company Should I Create?

min read
Opinions expressed by Entrepreneur contributors are their own.

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.
 

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