Engaging in entrepreneurial endeavours comes with a virtually infinite number of risks and liabilities, ranging from looming lawsuits and insolvency concerns to patent issues, operational impediments, failed investments, hierarchal hurdles, and other encumbrances that can snowball over time and decimate your outlook.
With this notion in mind, there are several specific ways to institute a low-risk strategy and shield your efforts from the vicissitudes of today’s commercial battlefield, the simplest and most manageable of which is to create a Swiss holding company, or even several of them.
However, if you’ve never heard of this particular corporate instrument, it’s important to gain a full understanding of what a holding company actually is and how it can make your life easier before you begin inquiring with a financial specialist.
What Is a Holding Company?
A holding company essentially allows you to compartmentalise your business and its assets by placing safeguards and barriers between all of your dealings.
Customarily, a holding company does little more than simply “hold” assets, patents, subdivisions, and other entities in a separate legal category than the original parent company, but this is incredibly valuable from the perspective of safety and legal protection.
Why Are Holding Companies So Advantageous?
Holding companies are surprisingly easy to create and administer, but arguably the most beneficial aspect is that they allow you diversify, sequester, and intricately manage your assets. Consider the following facts:
- A holding company can buy other companies and assume control over various entities through a straightforward subsidiary relationship, after which the holding company’s board of directors can govern the subsidiary in question as they see fit.
- Holding companies are also able to acquire both tangible and intangible assets, including physical land, plants and property, IPs, investments, and countless other articles of import. Sometimes, firms will set up a distinctive holding company to control their essential equipment and an entirely separate holding company to maintain jurisdiction of lucrative real estate assets and stock accounts.
- By setting up personalised legal barriers with holding companies, you can segregate your dealings into a multitude of entities and thus moderate the potential risks associated with insolvency, bankruptcy, or an unforeseen dearth of cash flow. Only the holding company, its board of directors, and its assets are held liable – not the individual or entity that created it.
Furthermore, you can also inaugurate a holding company in another country – such as Switzerland – to capitalise on lower corporate tax rates, decreased value-added taxes, and a higher per capita GDP, which naturally assuages fiscal risks.
There’s a reason why almost every single blue-chip syndicate and multinational business begins to institute holding companies as they grow and expand. These ultra-versatile entities ensure the constancy, security, and continuation of corporate dealings even in the midst of monetary complications, litigations, or liquidation.
A holding company can basically serve as a shield of armour for every unique aspect of your business, which effectually strengthens your entrepreneurial efforts as a whole, so be sure to get in touch with a trusted Swiss administrator as soon as possible to create a comprehensive plan.