How do you set up a holding company for multiple LLCs?

What are the steps, in order?

1. Decide the end state. Sketch the group as it would look with five businesses: who owns the parent, where investors come in, which companies share services. Build for that, not for today.
2. Choose the parent's legal form. LLC or C-corporation. The choice drives taxes, how investors can come in and how hard a later listing is. Make it with a CPA and a lawyer.
3. Form the parent. File in your chosen state, get a tax ID, appoint a registered agent, and adopt an operating agreement or bylaws written with future investors in mind.
4. Place each business under it. For a new acquisition, the parent forms a new subsidiary LLC to buy the target. For a business you already own, you transfer its membership interests to the parent. That transfer has tax and lender consequences, so plan it separately.
5. Rewrite each subsidiary's operating agreement. The parent is the sole member. The agreement names who manages the company and lists decisions that need the parent's approval, such as borrowing, hiring the top role or selling assets.
6. Sign intercompany agreements. Shared services, intercompany loans and any shared intellectual property, each in writing.
7. Open bank accounts for every entity. Each subsidiary pays its own bills from its own account.
8. Re-paper the operating details. Contracts, licenses, insurance policies, leases and payroll must sit in the entity that actually does the work.
9. Set up consolidated reporting. Separate books for each entity, one chart of accounts for all of them, and a monthly consolidated package.

Which documents does a holding company need?

• Formation documents and the operating agreement or bylaws for the parent.
• Formation documents and an updated operating agreement for each subsidiary, naming the parent as sole member.
• Assignment of membership interests for any existing LLC moved under the parent.
• A management or shared services agreement between the parent and each subsidiary.
• Promissory notes for any intercompany loan, with interest and repayment terms.
• Board or manager resolutions approving each of the above.
• Lender consents for any company with existing debt.
• A cap table for the parent showing every owner and every right to future equity.

How do intercompany agreements work?

They record how money moves between companies that share an owner. Without them, cash moving between entities looks like commingling, which weakens liability separation and confuses lenders, auditors and tax authorities.

The most common is a shared services agreement. The parent employs people who serve several subsidiaries, such as a finance lead or a recruiter, and charges each subsidiary a documented share of the cost. A worked example, with assumed figures:

1. The parent's shared finance and HR cost is $200,000 a year.
2. Subsidiary A has $3,000,000 of revenue and Subsidiary B has $1,000,000. Total: $4,000,000.
3. Allocate by revenue: A pays $200,000 x 75% = $150,000. B pays $200,000 x 25% = $50,000.
4. Each subsidiary records the fee as an expense. The parent records it as revenue that covers its costs.

Pick an allocation method you can defend, such as revenue, headcount or time, and apply it consistently. A CPA should confirm the method and its tax treatment.

Tell your lender about these fees before you charge them. A fee paid up to the parent reduces the subsidiary's cash flow. If that subsidiary has an SBA loan, the lender underwrote it on that cash flow (as of October 2026, 1.25x coverage for an Initial Acquisition and 1.15x for a Business Expansion), and fees paid up to the parent shrink the cushion. Confirm with your lender and CPA.

How should banking and cash moves work?

• One account set per entity. Never pay one company's bills from another company's account.
• Cash moves up by a named method. A distribution, a fee under the services agreement, or repayment of a documented loan. Each one is recorded on both sets of books.
• Cash moves down by a named method. A capital contribution or a documented loan from the parent.
• Read your loan documents. Loan agreements commonly restrict distributions and require lender consent for changes in ownership. If minority investors' equity counted toward an SBA injection, those investors generally receive only tax distributions until the SBA loan is repaid.

What mistakes undo the structure?

• Signing contracts in the wrong entity's name, or in the parent's name for a subsidiary's work.
• Paying shared costs from whichever account has money, without an agreement.
• Moving an LLC that has an SBA loan without the lender's consent.
• Assuming the structure ends your personal guarantees. It does not. Owners of 20% or more guarantee SBA loans in any structure.
• Letting the books fall behind. If listing is ever possible, OTCQB requires PCAOB-audited annual financials for the consolidated group.

Where these numbers come from: the 7(a) cap from the SBA; coverage, guarantee and minority-investor rules from SOP 50 10 8.1 via Beancount; the audit requirement from the OTCQB Rules. Shared-cost figures in the example are assumptions. SOP 50 10 8.1 applies to loans numbered on or after October 1, 2026; lender practice under it is still settling and these are secondary summaries, so confirm current terms with your SBA lender.

Related questions

Can the holding company be in a different state from the LLCs?

Yes. Many owners form the parent in one state and keep operating companies where they do business. Each entity must register in the states where it operates. A lawyer can tell you whether the extra filings are worth it.

Do I need a separate tax return for each LLC?

It depends on the parent's form and how each LLC is classified for tax. A single-member LLC owned by a parent can often be disregarded for federal tax, but state rules vary. Confirm with a CPA.

Should the parent own 100% of each subsidiary?

It is simplest. Some acquirers let a seller or manager keep a minority stake in one subsidiary as rollover or incentive equity. That adds a second owner whose rights the operating agreement must spell out.

What comes next

The first decision in the setup is the parent's legal form, and it shapes taxes, investors and any future listing: Should a holding company be an LLC or a C-corp?

Related articles

• Should a holding company be an LLC or a C-corp?
• How do you move an existing business under a new holding company?
• How much does it cost to set up a holding company?
• Should a second business sit under my company, a sister LLC, or a new holding company?
• How do you build a holding company for acquisitions?

Meraki Dealmakers is a service of Meraki Partners, LLC, an advisory firm. It is not a broker-dealer, investment adviser, business broker, law firm or accounting firm. This article is general information, not legal, tax or investment advice.