About John A. Troland Expertise I am a professional accountant, small business consultant and business
plan writer with 43 years experience ( I am also listed on allexperts
website as a volunteer in the category of Writing Business Plans).I can answer questions on what needs to be done to start a small business; forms of legal organization;financing for the business; need for a business plan; questions related to the purchase of a
business; risks and rewards of owning a small business; marketing and promotion questions and questions concerning bookkeeping, accounting
and tax considerations when starting a small business
Experience
Past/Present Clients numerous clients over 43 years in retail, wholesale, service and the
manufacturing sectors
Question My husband is starting an incorp/ltd. company as a consultant. I am also starting a company, doing services similar to massage. After the first year, we expect him to make $100,000+/year and me to make $30,000+/year.
We were thinking it would be better to use his company as the parent company (or a holding company), and have mine as a subsidiary.
Potential “pros” to a “combined” company could include:
- a combined year-end accounting fee
- combined worker's compensation insurance
- averaging of profits (my company likely to have negative profits the first year).
Potential “cons” could be:
- having his portion of the company liable if I get sued and vice-versa
- added complexities – ie – which company gets to write off the computer equipment, etc.
My main question is, from your perspective, are we better off forming 2 separate companies or forming the parent/holding and subsidiary company? Please correct any erroneous thinking we may have and add any other major things we have not considered.
(PS – we are in Canada and I realize some laws are different).
Thank you for your time and consideration of our question!
Nicole
Answer Nicole: My nearly 45 years of experience as a business consultant, accountant and business plan writer tells me the BEST WAY for you and your husband to go with two entirely different kinds of businesses is: 2 SEPARATE businesses. Some startup fees such as legal and accounting fees and perhaps yearend tax fees may be more BUT in the LONG RUN the BEST way to go is indeed 2 SEPARTE businesses for legal purposes.
