We all want to have a successful business, which gives us an opportunity to be our own boss. It allows us to have proper flexibility and a good work-life balance. Many of us think about establishing our own business and making it successful with time. Starting a business helps us to improve our creativity, follow our passion, and know about management. Today, we will know how to start a holding company in India and what are the things required to start this business.
What Is A Holding Company?
First of all, we need to know what a holding company is. So, a holding company is a parent company that controls subsidiary companies but does not have enough interference in daily operations. If we talk about the tax-efficient holding company structure, it is usually a Limited Liability Company (LLC) or corporation.
What Is A Subsidiary Company?
The subsidiary companies are the organizations that are fully or partially controlled by some other organization. It has been seen that the parent company usually holds over 50% of the stocks of the subsidiary company.
Relation Between Holding And Subsidiary Company
The holding company owns the subsidiary company and is also known as a parent company. A holding company can have excessive control over many subsidiary companies because the composition is controlled by the parent company.
3 Advantages Of A Holding Company
There are many advantages of a holding company, including innovation, succession planning, and diversification. While explaining the holding company tax benefits, it can be said that if a holding company has more than 80% ownership of a subsidiary, then the tax liability will be low, if any subsidiary faces a loss. Some more advantages of a holding company are-
- Reduce risk -A holding company minimizes the risk of losing valuable assets, even if the entity gets separated from the parent company.
- Minimize tax – A parent company reduces the tax for the subsidiaries to pay and the tax liability becomes very low on the subsidiary companies.
- Asset protection – Holding companies take the assets of the subsidiaries and keep them safe. These assets are protected from creditors and are kept securely with the holding company.
Therefore, we can say that in order to start a holding company in India, you must know about it properly. Starting a business is not an easy task, you should acquire complete knowledge about it.
How To Start A Holding Company In India (7 Steps)
If you are planning to start a holding company in India, you need to focus on some facts. You have questions regarding the money that is required to start a holding company. Many people ask if they can start a business with no money.
So, the answer is very clear, it is not possible to establish a holding company with no money because you need to go through a complete procedure before starting any kind of business. You should look at the following points before starting a holding company in India.
#1. Finalize Your Business Structure:-
It is important to decide the structure of your holding company, whether it would be a Limited Liability Company (LLC), partnership, or corporation. This will be done with the help of an operating agreement with the associated departments. It has been seen that an LLC is the best entity for starting a holding business in India as gives flexibility and protects the assets.
#2. Registration:-
You must collect and verify all the documents that are required for company registration in India. It is now done through online websites as well, so you can complete this process with a simple click.
#3. Create a Bank Account:-
If you are willing to start a holding company, you must open an account for your holding company. It has become an easy process nowadays, you can open your bank account online, without going to the bank and staying for hours in a queue.
#4. Location:-
The location of your business should be decided very wisely. Try to target a place in the market where it will become easier for you to capture the subsidiaries. It will save operation costs, hence it is an important factor to look at.
#5. Determining Taxation Approach:-
Determining the taxation approach is an important factor to look at. Every entity will go through a taxation process and will be considered a separate entity.
#6. Finalize the Name:–
It is important to select the trading name and representatives before submitting the application. Choose a company name that is not registered in India and complete the documentation process.
#7. Appointing a Registered Agent:-
You should always choose a good agent for all your papers. It is a very big decision in your life and do not let a small mistake run everything.
Hence, the answer to the question “How much money do you need to start a holding company?”, is, it depends on your plan and the type of business. Mainly, it can be analyzed after knowing about the number of subsidiaries that you are planning to capture and the value of those assets.
For the online registration process, you should apply for Digital Signature Certificates (DSC) and Director Identification Number (DIN) first, by keeping all the documents ready.
Then you should file for the RUN, by drafting the Memorandum of Association (MOA) and Articles of Association (AOA) of the company. Finally, you are ready to go through the final registration process through an online application.
How To Promote Your Holding Company In India?
✓ Website: If you want to promote your holding company in India, you can use the strategy of promoting it through a website. It will improve brand awareness and attract more customers to your business.
✓ Social Media: You can use social media to promote your holding business and it will bring a wide range of audiences to your business. As we all know people are more inclined towards online services nowadays, so, promoting through this channel will establish a strong brand identity
✓ Youtube: Marketing through YouTube is an effective way to grab the attention of the audience who are active on this platform. It will help you to improve the engagement and target the customers for your holding business.
✓ PPC: This will make you bring traffic to your website by focusing on the keywords and the pointers that are in demand. It is a very cost-effective method that helps provide you with good leads.
Conclusion: How To Start A Holding Company In India
To sum up the points, we can say that starting a business in India is not an easy task. You need to look at every single thing before making any decision in your business.
If you want to start a holding business in India, you should get ready with all your papers, choose the location wisely, finalize the name of the company and business structure. Starting a holding company will give you the benefit of experiencing the unique experience of owning a business. Controlling subsidiaries in several industries will give you an opportunity to learn many things.
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