what the point of a holding company is

Question

If I owned two companies, why would I make a third company to own them both, instead of just putting them both in my own name?

In: 4

Answer 1

If you owned 2 companies, there is no real advantage to a holding company.

The purpose of a holding company is to own other companies. However, you only need a company to do the owning, if tge ownership is shared among a number of people.

Lets say, you run a domestic residence landlord business.

You buy each house with its own separate company. This means, if one company loses money and goes bankrupt, it only affects that one company, not the others.

Your set up a holding company for your investors. This way they only have to deal with the admin of owning a share of one company. The holding company deals with the admin of owning 50 separate companies.