Does creating an LLC that is a holding company for other LLCs provide additional asset protection?


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Are there any benefits to creating an LLC that does nothing but act as a holding company for other LLC entities?

Does that provide any added benefits in terms of asset protection?

LLC Legal Company Legal Entity

asked Mar 5 '14 at 16:39
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Paul Newman
125 points

1 Answer


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Yes it offers more protection if you structure it correctly. Here is a common use case:

  • Create an LLC that owns business assets such as equipment, real estate, etc. This is the holding company.
  • Your other LLCs that do the actual business with customers, called an operating company, leases the equipment from the holding company at market rates.

The benefit of doing this? If someone sues one of your operating companies, the assets it is leasing from the holding company are protected from that lawsuit.

There is a downside to creating this structure though. You have to treat each entity separately -- each will have it's separate books, operating agreements, bank accounts, etc. If they share a common resource, then you need a shared services agreement as well.

answered Mar 6 '14 at 00:00
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Nishank Khanna
4,265 points

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