Julian Drago
April 8, 2025
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In the business world, we often hear the term "business holding," but not everyone knows exactly what it means or how it can benefit a company.
In this article, we’ll explore the different types of business holdings, how they work, and the benefits they can bring to your company. If you’ve ever considered structuring your business this way, or if you're already operating under this model, this blog will be very useful.
A business holding is a company whose main purpose is to control other companies through the acquisition of their shares or ownership stakes. While a holding company usually doesn’t get involved in the day-to-day operations of the businesses it controls, it plays a key role in strategic decision-making and managing its corporate interests.
The primary function of a holding is to control, manage, and oversee the subsidiary companies that form part of its group. Although these companies may operate independently, the holding has a significant influence over their financial and administrative structure.
There are different types of business holdings, depending on their goals and organizational structure. Here are the most common ones:
A business holding operates based on a hierarchical structure established between the parent company (holding) and its subsidiaries. The holding owns a majority or significant stake in the subsidiaries, giving it the power to influence strategic decisions and general management.
In practice, the holding oversees the subsidiaries’ operations but does not handle their daily management. Subsidiaries retain their independent administration, although they follow the overarching strategic guidelines set by the holding.
This structure allows for risk diversification, as financial trouble in one subsidiary may have limited impact on the rest of the group. It also facilitates tax optimization, since the holding can take advantage of tax incentives and consolidate its tax returns.
Business holdings offer several benefits both for individual companies and for the group as a whole. Let’s explore the main advantages of operating under a holding structure:
Creating a business holding can be an excellent strategy for growing companies or those looking to diversify and optimize their resources. Some scenarios where creating a holding may be beneficial include:
If your company is seeking ways to expand, diversify operations, or improve its financial structure, a business holding might be an excellent option to achieve those goals.
Always consult with professionals like Openbiz to properly structure your holding and take full advantage of everything this model has to offer.
1. What is the difference between a credit note and a debit note?
A credit note is issued to reduce the amount a customer owes to a company, typically due to returns, discounts, or invoice corrections. On the other hand, a debit note is used to increase the amount owed by the customer, usually due to additional charges or errors resulting in a higher balance.
2. Is it mandatory to issue a credit note for returns or discounts?
Yes, in many countries, including Colombia, it is mandatory to issue a credit note to formally record product returns, post-invoice discounts, or invoice corrections. This document ensures transparency and compliance with tax regulations.
3. How does a credit note affect a company’s accounting?
Issuing a credit note decreases accounts receivable and recorded revenue. This leads to a reduction in total sales and may affect tax calculations, such as VAT, which must be adjusted accordingly.
4. Is it recommended to use accounting software to manage credit notes?
Yes, using accounting software makes it easier to issue, record, and track credit notes, ensuring compliance with legal and tax requirements. It also helps maintain organized and efficient financial transaction records.
1. What is the difference between a pure holding and a mixed holding company?
A pure holding company is exclusively dedicated to owning and managing shares in other companies, without engaging in its own commercial activities. In contrast, a mixed holding company not only controls other businesses but also carries out its own economic activities, such as providing services to its subsidiaries or managing business operations.
2. What are the tax advantages of creating a holding company?
Holding companies may benefit from various tax advantages, such as the ability to consolidate the financial results of group companies, which allows offsetting profits and losses between them. In some countries, dividends received from subsidiaries may be tax-exempt, and capital gains from the sale of shares can receive favorable tax treatment.
3. How is asset protection achieved in a holding structure?
By separating business operations into different subsidiaries under a holding company, the legal and financial liability of each entity is limited. This means that if one subsidiary encounters legal or financial issues, the rest of the group and the parent holding may be protected, preventing risks from spreading across the entire group.
4. Is there a minimum capital requirement to create a holding company?
The minimum capital required to establish a holding company depends on the laws of the country where it is incorporated. In general, the same requirements apply as for forming other commercial entities, such as corporations or limited liability companies. It is advisable to consult a local legal or tax advisor to understand the specific requirements.
