What is Family Holding and what are the advantages of this resource?

Find out what a family holding company is and how it can help your family

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If you are interested in or part of the business world, you have certainly heard the term “family holding company” somewhere.

However, few people really know what this means in practice and what benefits the family holding company has.

With that in mind, in today’s article, we’ll explain everything about the subject. To learn more, continue reading.

What is a holding?

The word holding, in English, has several meanings, such as detain, maintain or secure, for example.

Thus, holding companies are companies whose main activity is majority shareholding in one or more companies.

In other words, this company participates as a partner in other businesses. In fact, its assets, or at least part of them, are made up of various corporate interests.

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What is a family holding company?

A family holding company is a company formed by people from the same family.

It is called family-based because its objective is to control the assets of individuals who belong to the same family.

In this way, their assets, be real estate or even other businesses, are not in their name, but rather in that of the holding company.

It is a way to facilitate and make more efficient the administration of the assets of all those involved and the succession in the event of death.

As the assets are incorporated as share capital, they are protected from the problems of individuals.

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How does a family holding company work?

Typically, family holdings are set up as limited companies.

Holding companies are divided into two types: pure and mixed.

The purpose of a pure holding company is to manage the share capital of the companies it manages. This means that decisions are restricted to financial matters.

A mixed holding company is the opposite of a pure holding company, that is, decisions are not restricted.

As the name suggests, here it is possible to carry out more than one type of activity.

When creating a holding company and composing the share capital with the partners' assets, the administration also becomes joint.

This way, decisions related to payments and management, for example, can be made by everyone.

What are the main advantages of setting up a family holding company?

The family holding company has numerous advantages, such as:

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1. Professional management of family assets

This type of company allows management or administration to be assigned to a single member or even to a specialized professional with technical knowledge in the area.

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2. Financial planning

Through the family holding company, it is possible to concentrate assets and, thus, facilitate collective management.

Furthermore, it is also necessary to establish a policy for investing assets and distributing profits.

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3. Tax planning

Tax planning is a set of strategies that aim to reduce a business's tax burden, in a completely legal way.

As you can imagine, this process is usually bureaucratic.

Compliance with an organization's tax obligations must be carried out in an organized manner.

The creation of a holding company has a positive result in reducing tax burdens when it comes to managing family assets.

Through society, it is possible to do the use of tax incentives in taxation income from the assets of the legal entity, that is, the company.

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4. Facilitates succession planning

Succession planning is a set of measures that organize, in advance, the transfer of assets from a living person to their heirs.

And the holding company is widely used to facilitate the succession of assets, that is, the division that occurs in the inheritance.

Partners can entrust their assets to this company, as there are no problems with alienation.

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When is it worth owning a family holding company?

A family holding company is a company created to manage assets and assets in an organized manner.

Adopting this method ensures that the sharing of assets is done in a completely legal manner.

This is usually worth it when a family is large and has a lot of assets. After all, expenses can be shared.

Outside of this environment, the method ends up not being so common.

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How much does it cost to open a family holding company?

Typically, you need to spend around R$15,000 on opening.

However, this figure becomes higher when you add real estate to the equation.

You can estimate approximately R$ 4 thousand per property.

Maintaining a family holding company has a lower cost than opening one. The costs are around R$1,250, but real estate and assets can increase this amount.

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What are the disadvantages of family holdings?

You already know what the main advantages of this type of business are.

However, it is important to be aware that some difficulties may arise, such as increased complexity in asset management and maintenance expenses for the company.

Furthermore, problems may occur related to the distinction between the family and patrimonial environment, losses caused mainly by inadequate tax planning.

In any case, it is possible to plan and organize to prevent this from causing problems.

This way, if any of these disadvantages occur, the entrepreneur will be able to deal with the situation better.

In addition to the financial aspect, there is also the family aspect. Therefore, there must be assertive and objective communication, which reduces the chances of conflicts arising.

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What assets can be placed in the holding company?

A holding company may not always be advantageous, especially when the interested party does not own many assets.

Among the main assets for incorporation into the share capital of the legal entity, we can mention real estate, furniture, other companies, etc.

Conclusion

The family holding company facilitates the succession process, as when compared to the judicial inventory, the holding company is more advantageous.

Furthermore, it also enables financial and tax planning.

It is worthwhile if the family has a lot of assets making up its estate. However, outside of this situation, it is not very common to use this solution to preserve the inheritance.

It is important to mention that first of all, it is necessary to draw up a study and analysis plan, which varies according to the family profile.