New Year and New Ways to Make a Parent Company More Profitable

Los Angeles – In the New Year, there are many benefits to opening or acquiring a subsidiary company. With the economy in the doldrums, it is possible to obtain control of another company with less investment than it would be to consolidate or merge. A parent company must only have a controlling interest in the new company.

Parent companies, also known as holding companies, and their subsidiaries are deemed separate legal entities, so the parent company’s assets are not exposed to creditors’ claims that could come against the subsidiary. Each subsidiary has its own management team and is responsible to the holding company for its own profits and losses. Underperforming subsidiaries can be sold off without tarnishing the parent company’s assets and credit ratings.

“Today’s marketplace is not easy to thrive in, so having a lawyer when starting a business or acquiring a new one can mean the difference in your bottom line,” said Anthony Spotora, Los Angeles business lawyer. “We go over specialized tax structuring advantages, how to limit personal liability and what documents are necessary to keep your company in good standing.”

The parent-subsidiary structure allows for decentralized management and fees. Their corporate identities can be very distinct, yet the holding company can benefit from positive recognition and at the same time offer specialized staff that can benefit the subsidiaries.

When it comes to taxes, a consolidated tax return can be done when the parent company owns at least 80 percent of the voting stock in the subsidiary. Losses from one subsidiary can be used to offset profits on another side of the business to decrease taxable income on the tax return.

The Law Offices of Spotora & Associates work with individual clients as well as corporate clientele that range from closely held corporations to Fortune 500 standouts. Anthony Spotora, Managing Attorney, counsels on the establishment and structuring of various legal enterprises, advising clients on business operations as well as legal and tax issues involved.

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This entry was posted on Tuesday, February 22nd, 2011 at 1:23 pm and is filed under Business & Corporate Law. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

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