Benefits of a Holding Company?

Holding Company Benefits 

We get asked all the time what the benefits are from utilizing a holding company?  There are two key benefits: 1) Creditor proofing or protecting the assets in the operating company, and 2) Income splitting with family members to reduce your overall family taxes payable.

Creditor Proofing Your Business

When you have built a successful business you will want a strategy that projects the assets in the operating company from debt collectors and lawsuits.  You can execute this by paying dividends from your operating company to the holding company as the business builds retained earnings.  Since the Hold Co. will be a "connected corporation" for tax purposes the result is a tax free dividend.  You simply loan the funds back to the operating company with a secured loan secure so that your holding company will have first claim to the assets of the business.

Income Splitting for Tax Optimization

The benefits of income splitting results in a reduced overall tax bill for you and your family.  You can issue your family members shares in the holding company and pay each dividends accordingly.

Contacts us for more information

For more information on how to incorporate a holding company and transfer your operating company shares with a tax free rollover contact an MP Group Advisor at 416-214-215-0527, or visit www.mpgroupcpa.com

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