Choosing a State of Organization

Before deciding how to set up your holding company, you should consider the asset protection, taxation, and privacy benefits of different states. Since holding companies are not engaged in operations directly, you have flexibility in choosing where to base your company.

Forming a holding company in Wyoming, Delaware, Nevada, or Texas are popular options. These jurisdictions, particularly Delaware, Nevada, and Texas, offer very robust charging order protections which protect the entity from liability of the members as well as highly developed bodies of corporate law. This is why so many companies are set up in these states even though comparatively few people live there.

You should keep in mind that certain states can also offer more anonymity than others. Some states like Wyoming and Delaware do not disclose the names of the owners of businesses in those states, and Wyoming does not even require names of owners to be provided.

However, every state requires the identity of the organizer, which will appear in the public record. This is why it’s critical for entrepreneurs concerned with privacy to use a qualified business attorney to form their entity for them, ensuring their name stays completely out of the public eye.

Choose a Business Structure and Entity Type

Though a holding company can be any form of entity, from limited partnership to corporation to a non-profit, most holding companies are either a limited liability company (LLC) or a corporation. An LLC offers asset protection, generally has reduced compliance regulations, and most often lets you avoid double-taxation thanks to pass-through taxation.

LLCs are simpler in terms of management and have significant flexibility available when drafting their organization document saying how the company operates (operating agreement). Corporations stand out with their perceived greater prestige, ability to offer equity in a more straight-forward manner, the built-in management for re-investing, and the fact that a legal precedent for them has been around for a long time.

1. Name Your Holding Company

It’s possible that choosing a holding company's name is the hardest part. While other factors can be reasonably weighed and measured, a name usually just strikes you. We recommend a name that's meaningful to you but that does not get rid of your privacy. Calling a company "Your Last Name Enterprises, LLC" may be convenient, but it does not afford you any privacy. The name of the company will always be public, even if formed as a Wyoming holding company or Delaware holding company.

Legally, in most situations, you have to include the appropriate entity identifier in your name. This would be "LLC" in the case of a limited liability company or "Corp."/"Inc." in the case of a corporation. Note that Wyoming does not require "Inc." or "Corp." for corporations. Also, you must confirm that the Secretary of State does not already have a registered business with the name you want on file. States usually offer a simple name search for businesses, so you can check this in minutes online. We'll also do it for free for you, and we'll allow you to enter an alternative name in case the first isn't available.

2. Write the Operating Agreement or Bylaws

The next step is to draft your governing documents. Corporations are generally required to adopt bylaws but LLCs usually are not required to have an operating agreement. Still, it is highly advisable to complete and sign the proper formation documents. All owners, managers, members, and officers (or directors) should do so. This helps to ensure that the rules you set will be followed.

For an LLC, you'll need an operating agreement, and for a corporation, you'll need bylaws. Either type of governing document should address your company's ownership as well as its management.

Although these documents contain all of your personal information, they remain internal; there is no requirement to file them anywhere. This is what keeps your LLC or corporation anonymous in states like Delaware or Wyoming.

3. Outlining Ownership

One of the key aspects of a governing document is the outlining of the ownership of the company. For an LLC holding company, that information would include the percentage of ownership that every member receives in addition to what they contribute to receive that percentage.

In most cases, the ownership percentage relates to the original contribution's value. In the case of corporations, the relevant part of the governing documents will outline the initial contributions of stockholders in addition to the stock quantities they receive.

This portion of the governing document should also feature any regulations or rules related to changes in ownership or transferring ownership. This should include the process by which current owners would be able to sell out of the company and the process by which new shareholders or members could buy into it.

4. Setting Up Management

When setting up a holding company, the governing documents must clearly define how the entity will be managed. For LLCs, this includes deciding whether the company will be member‑managed (owners handle daily decisions) or manager‑managed (appointed managers oversee operations). That choice should be expressly stated in the operating agreement, along with detailed provisions outlining the rights, responsibilities, and authority of both members and managers.

For corporations, the governing documents take the form of corporate bylaws. These bylaws establish the board of directors and outline the appointment of corporate officers such as the president, treasurer, and secretary. Each officer’s duties should be carefully defined to avoid ambiguity and reduce the risk of disputes.

By drafting these provisions with precision, you ensure clarity in governance, protect liability shields, and strengthen compliance, all critical aspects of forming a legally sound holding company. Additionally, sophisticated corporate structures will have governing restrictions included in the charter as well to bind the corporation even if the bylaws change.

5. File Your Articles

The next step to register your holding company is to file your articles forming the entity with the Secretary of State, Department of State, or applicable governing body.

For LLCs, Articles of Organization act as the formation document, while Wyoming corporations use Articles of Incorporation. States charge a fee for filing, which can vary from state to state.

For example, in Florida, the state fee to form an LLC is $125, which is paid directly to the Division of Corporations (Sunbiz). There are no other fees due the first year, though there is a fee accompanying the annual report due each following year.

In Delaware, the state fee to form an LLC is $110, payable to the Division of Corporations. This does not include the annual $300 franchise tax, which can be imposed in some states like Delaware. In Wyoming, the filing fee to form an LLC is $100, paid to the Secretary of State (plus $4 if filed online).

For corporations, articles of incorporation (or a “charter”) act as the formation document. Depending on the state, this can also be called the Certificate of Incorporation or Certificate of Formation.

In Florida, the filing fee to form a profit corporation is $87.50, payable to the Division of Corporations through Sunbiz. Like LLCs, corporations also require an annual report each year and in some states require franchise taxes.

In Wyoming, the filing fee to form a corporation is $100, making it one of the lowest in the nation. In Delaware, the filing fee to form a corporation starts at $109, and can vary depending on whether the stock has par value or not.

You can complete this filing process yourself, or you can use a professional filing service to make the process go more smoothly.

6. Appoint a Registered Agent

Every state requires that a newly formed business entity designate a registered agent within the state. The registered agent is responsible for receiving official notices, including service of process in the event of a lawsuit, as well as other legal and compliance communications.

When filing formation documents with the Secretary of State, the name of the filer must also be provided. For an LLC, this individual is referred to as the organizer, while for a corporation, the filer is known as the incorporator.

At Tarro Law, we help clients protect their privacy and streamline the formation process. By acting as your registered agent (in select states) and preparing the necessary governing documents, we make it simple to establish your company while minimizing public exposure of your personal information.

7. Apply for an EIN

The IRS issues every business an employer identification number, known as an EIN, FEIN, Federal EIN, employer ID, or taxpayer ID. The EIN is used on federal taxes to identify your company.

While all corporations need an EIN, certain single-member LLCs may have an exemption. However, we almost always advise obtaining an EIN, so you can keep the company's finances separate from your own.

With no EIN, and thus no separate bank account, it's difficult to argue that you obeyed corporate formalities and deserve the benefit of the law in case of a lawsuit or other negative credit event. It can expose financial avenues in the event of a judgment or garnishment.

Any company with employees that files certain tax returns, has Keogh plans, has multiple owners, or is involved with trusts, real estate, mortgage investments, estates, farmers' cooperatives, nonprofits, or plan administrators needs an employer identification number. EINs are issued for free by the IRS on their website.

8. Open a Bank Account

Establishing a business bank account is a straightforward but essential step in maintaining the separation between your personal and company finances.

Most banks will need you to show the bank your articles of incorporation or organization, the corporate bylaws or operating agreement, your EIN, and the initial resolution that authorizes account openings.

We prepare these governing documents as part of our standard business formation service. Clients may choose to obtain an EIN directly from the IRS or select one of our bundled packages that includes EIN registration, ensuring a seamless setup process.

9. Get a Business License

Not every state requires a general business license, though some jurisdictions impose significant fees even when no meaningful regulatory oversight is provided.

That said, certain industries are always subject to licensing requirements. Businesses engaged in healthcare, wildlife management, transportation, insurance, fire prevention, electricity, banking, and food services must obtain the appropriate licenses before operating.

In addition, many professional services, including medicine, law, barbershops, athletic training, and other regulated fields, require specialized licensing to comply with state law. Importantly, these requirements apply to operating subsidiaries that conduct business activities.

A holding company, by contrast, does not transact directly with the public and therefore does not need a business license. Its role is limited to owning and managing subsidiaries, which are the entities responsible for obtaining any required licenses.

10. Setting Up Subsidiaries

From a practical standpoint, it is generally most efficient to establish the holding company first and then form the subsidiary entities. By listing the holding company as the owner of each subsidiary at the outset, the initial formation documents can be drafted accurately and in compliance with state requirements.

If you already operate existing businesses and wish to place them under the umbrella of a newly formed holding company, you will need to amend the operating agreement (for LLCs) or corporate bylaws (for corporations) of each subsidiary to reflect the new ownership structure.

This ensures that governance documents remain consistent, liability protections are preserved, and the holding company is properly recognized as the parent entity.

Wrapping Up: How to Set up a Holding Company

Forming a holding company follows a structured process similar to creating any other business entity, but with one key distinction: a holding company exists to own and control subsidiaries rather than engage directly in day‑to‑day operations or sales.

This structure provides flexibility for diverse asset ownership, including real estate, intellectual property, and investment portfolios. Our expertise simplifies this process.

For those intrigued by the potential advantages of holding companies, our knowledgeable Florida business attorney team and Rhode Island business attorney team is readily available to assist. To initiate contact, contact our office today at 401‑272‑8300 or complete our online form to talk to an experienced business law attorney. We've also addressed some of the most frequently asked questions below.

Frequently Asked Questions About Holding Companies: Understanding the Basics

1. How do I start a holding company?

Starting a holding company is not significantly different from forming a traditional LLC or Corporation. The filing process is the same, but the difference comes in how the company operates and how the internal documents are structured, e.g. the operating agreement or bylaws.

2. Why would I set up a holding company?

A holding company should be setup to provide privacy, asset protection, minimize taxes, and enhance flexibility when investing across various asset classes.

3. What is a holding company and how is it created?

A holding company is designed to hold a variety of assets, but it is formed the same as any other company. The difference is operations are generally outsourced or pushed down to a subsidiary for asset protection.

4. Can one person own a holding company?

One person can own a holding company. This holding company may be used to invest as an individual or with other partners. The holding company can be owned by one person or a trust if preferred.