Question: What’s the Difference Between a Holding Company and Operating Company?Answer:
A holding company is a company that owns 100% of shares in an operating company (also known as a dual company structure). As the name suggests, the holding company holds the business’ valuable assets including intellectual property (IP) and equipment.
An operating company does all the trading – entering into contracts, hiring employees, and dealing with customers. Your operating company is your public face and generally holds all the liabilities of your business. As a result, the operating company is at risk of being held responsible if something goes awry within your business.
A key benefit of a dual company structure is that the holding company can protect your business’ assets from any liabilities that the operating company incurs.