A limited liability company, or LLC, is an adaptable corporate form that offers its owners a number of advantages. One of an LLC’s main benefits is that it protects its members’ personal assets from the company’s debts and obligations by providing liability protection. Due to this characteristic, an LLC is a great choice for a holding business.
A holding company is a firm that holds the shares or assets of other companies, giving it the ability to manage many companies under one roof. It is common practice to employ an LLC as a holding company since it enables the owner to divide the liabilities and assets of the several enterprises. This means that the assets and liabilities of the other businesses will not be impacted if one of the enterprises experiences legal or financial difficulties.
You should first establish a holding company LLC in order to handle many LLCs. This LLC will serve as the holding company for all other LLCs. For each subsidiary LLC you want to own, one should be set up. With this structure, it is possible to maintain the benefits of a single owner while keeping the assets and liabilities of each business distinct.
An LLC’s potential higher formation costs when compared to a sole proprietorship or partnership is one of its drawbacks. LLCs must go through a formal registration process and frequently need the help of an accountant or attorney, which can increase costs. Additionally, LLCs must submit annual reports to the state and pay annual fees, which can increase the costs.
There are many things to take into account while contrasting LLCs and sole proprietorships. Despite being simpler and less expensive to set up, sole proprietorships do not provide the same level of liability protection as an LLC. Because sole proprietors are personally liable for the debts and responsibilities of the business, personal assets may be taken to satisfy business debts.
Last but not least, the procedure can take several weeks if you’re asking how long it takes to form an LLC in Tennessee. Articles of Organization must be submitted to the Secretary of State’s office by LLCs in Tennessee. The processing of the application after the materials have been submitted can take up to ten business days. However, there is a surcharge for expedited services.
In conclusion, utilizing an LLC as a holding corporation has a number of advantages, including asset management and liability defense. However, it’s crucial to take into account the expenses connected with creating and running an LLC. Despite being simpler and less expensive to set up, sole proprietorships do not provide the same level of protection as an LLC. Last but not least, keep in mind that forming an LLC in Tennessee can take several weeks.
Since applying for an EIN with the IRS is free, there is no fee to obtain an EIN number in Tennessee. You can submit your application by phone, fax, mail, or online.