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When should a business owner set up a holding company?

I always tell my clients that tax planning is 90% structure. This is especially true when it comes to helping business owners protect their wealth and assets. Whether you are thinking of setting up a holding company, or know nothing at all about them, here are just a few to consider:

Holding companies are not just for ‘anonymous’ business dealings

Hold Co’s sometimes get a bad rap. They sometimes hit the news as ‘numbered companies’ behind less-than-savory dealings. But holding companies are a legitimate business strategy employed by thousands of Canadians in every type of business, and come with their own set of clear, legal rules, disclosures and declarations.

Holding Companies can help mitigate risk

One of the main functions of a corporation is to contain business risk within a company. But this means that assets within that company can also be vulnerable. If you own a company that carries some legal, liability or financial risk, a holding company can provide a safe vessel for profits, holdings or real estate.

Some assets can be transferred to a holding company with less tax burden

Dividends can be transferred between Canadian Controlled Private Corporations (CCPCs) without a big tax implication. If you own a CCPC and set up your holding company correctly, it can be relatively straightforward process to move dividend income between them.

These are just a few considerations for holding companies, and there can be even more advantages when it comes to trusts, individuals, real estate and estate planning.

It is extremely important to discuss your specific situation with a qualified advisor. One of our CPA’s would be pleased to offer advice and guidance.

If you would like to know more, the PVS Buttar team is here for you. Please email us or call anytime.

 

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