The advantages of a holding company are protection from losses, limited legal liability and the potential to limit tax liability, according to Investopedia. Disadvantages include limited knowledge of subsidiary operations and industries, conflicts of interest among shareholders and owning unprofitable assets and lines of business, explains Shaa Hudson for the Houston Chronicle.Continue Reading
A holding company exists for the sole purpose of owning other companies, notes Investopedia. In the case of a corporate conglomerate, the holding company owns a controlling interest in a variety of corporations by holding enough voting shares of the stock to control management and its policies. This results in the advantage of the holding company controlling and profiting from the companies it owns without being liable for their debts. Holding companies can also limit their tax liability by strategically placing certain subsidiaries in locations with lower tax rates.
The challenges faced by holding companies include management's limited knowledge of the day-to-day operations of the controlled companies and a frequent lack of understanding of the controlled companies industries, according to Hudson. Holding companies also frequently end up owning unprofitable assets or lines of business contained in their subsidiary corporations. When a company is acquired by a holding company, its management must contend with reporting to a new board of directors while still being required to act in the best interests of the subsidiaries' shareholders. Often, the best interests for the holding companies' shareholders come into conflict with the best interests of the subsidiaries' shareholders.Learn more about Managing a Business
Entrepreneurs and business people often name companies after some feature or product they offer, which leads to many company name options, especially for large companies. Those starting a company should choose a unique name that captures the company's main characteristics and is easy to search for on the Internet.Full Answer >
To start a taxi company, you need to research the competition by checking the number of taxi companies within your locality. Purchase the equipment and vehicles you want to use for the taxi business, apply for licenses, and insure your vehicles and equipment. Look for the best location of your business, hire experienced drivers and start advertising your business.Full Answer >
The pros of business mergers include factors such as monopoly regulation, research and development, duplication avoidance and network economies, while the cons include factors such as higher prices, less choice and job losses, according to Tejvan Pettinger at Economics Help. Depending upon the scale, business mergers tend to help top executives and shareholders, but consumers and employees tend to suffer most of the cons. However, this depends on each individual merger.Full Answer >
A shelter plan includes any legal means of reducing a taxpayer's taxable income and tax liability, according to Investopedia. Types of shelter plans include investments that provide favorable tax treatment or lower the taxable income. An employee sponsored 401(k) plan is the most common type of shelter plan.Full Answer >