We set up and manage Delaware Holding Companies for out-of-state organizations. Here is what you need to know about a holding company and what advantages this business structure offers.
Why Set Up a Holding Company?
A holding company is an effective tool to shield a corporation’s passive income from home state taxation. You could save your corporation significant amounts of state tax dollars every year with this business structure.
Delaware corporate income tax law provides an exemption from corporate income tax for corporations whose activities within Delaware are confined to the maintenance and management of their intangible investments. The collection and distribution of income from such investments or from tangible property physically located outside Delaware is also exempt.
Intangible investments specifically include:
- Notes and other debt obligations (including the debt obligations of affiliated corporations)
- Patents, trademarks, and similar types of intangible assets
Setting up a Holding Company with Advantage Delaware
We offer an outstanding level of service and reliable support to our Delaware Holding Company clients. We are professional practitioners with the qualifications and experience necessary to assume executive responsibilities.
The type of investments held by a Delaware Holding Company will determine the level of management services required. We customize our services to meet the needs of each client with a level of flexibility to support any changes in business requirements.
Our professional services include (but are not limited to):
- Initial set up
- Site management
- Accounting and tax services
- Executive management
- Board of Director representation
Set up your Delaware Holding Company today:
Maintaining a Holding Company
After more than 25 years of experience with various Delaware Holding Companies, we realize that establishing a valid and substantial presence in Delaware is essential. Substance will minimize the possibility that other states will be successful at taxing the income of the holding company.
We recommend the following steps be taken to establish a substantial nexus within Delaware:
- Own or lease office space, furniture, office equipment, and have a Delaware phone.
- Use this Delaware address for corporate stationery, correspondence, filing of payroll and tax returns, and storage of corporate holdings and records.
- Set up one or more Delaware bank accounts, through which income is collected and disbursed for all holding company operations, dividends, and loans.
We offer services to help our clients establish a real presence in Delaware.
It is essential to retain a Delaware employee (or independent contractor) with the education and experience to manage a holding company. The performance of real and meaningful activities should include: check signing authority, wire transfer authority, and sufficient authority to transact all corporate business of the holding company between Board of Director meetings.
Duties should include the documentation of corporate transactions, accounting functions, and a working knowledge of the intangibles managed. In many instances, it is advantageous to have this Delaware employee serve on the Board of Directors of the holding company. These duties are absolutely essential to operating a holding company as an entity separate and distinct from its parent company and affiliates.
Recently, Delaware Holding Companies have received increased attention from other state revenue departments. It has been proven time and again the best way to protect holding company income tax savings is to create as much nexus in Delaware as possible by establishing each holding company as a valid corporation controlled and managed in Delaware.
Rely on Advantage Delaware to advise and assist you in managing your holding company.