so why did the business owner give an umbrella to his employee because he had to cover for him
all right let's go ahead and talk about how to start an umbrella or holding llc company step
by step so first off you need to know that an umbrella company is basically a business entity
that controls multiple businesses at once so if we're thinking about like a company chart at the
very top you have an umbrella company right hence the name umbrella company because it's kind of
like an umbrella and then beneath the umbrella company you have other operating businesses or
assets which are typically called subsidiaries now you may hear umbrella companies and subsidiaries
call different things so for example some people refer to umbrella companies as the parent company
in the subsidiaries as the child companies or you may hear umbrella companies referred to as
holding companies all right it's all basically the same thing now the holding company does not
generate any revenue or run any specific business operations it simply holds stock in the subsidiary
or other operating companies whereas the subsidiaries are actually the operating companies
like those businesses actually produce revenue and then the revenue and profits are consolidated
inside of the umbrella company all right so the first step step number one for creating an
umbrella or holding company is simply to form the business entity now typically you're going to
want an umbrella company established as something like an loc or a corporation because that offers
limited liability protection which basically protects your personal assets against any other
business disputes or legal issues so let's say for example that you decide to create an
llc umbrella company what you need to do first is to complete the articles of incorporation
and then submit them to your secretary of state office the biggest things you're gonna need at
this point are number one you're gonna need the name of your holding company number two you need
a registered agent which could be you or someone else that you choose and then number three you're
gonna need to pay the cost to get the business set up now if you've ever established an llc before
then the process is pretty similar for creating an umbrella company so after that you're ready to
move into step number two but really quick before i move into step number two if you are new to our
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subscribe if you're really serious about building tax-free wealth alright so step number two
create your operations agreement or your bylaws for how your umbrella company will operate
now this is also pretty standard when it comes to creating and setting up an llc in general but the
key in this step is to make sure that you create a cause and your operating agreement establishing
that the new loc which will be your umbrella company is authorized to form subsidiary companies
because this is really where you start to establish the control between the parent company
and the child company again that could be the umbrella company or the holding company
and it does this through this legal step where you're creating these provisions and clauses
in your operating agreement and while you're at this step of course it's important to make the
decision of who will actually manage your umbrella company like who are the managing partners and
then who are going to be your limited partners as well as establishing a board of directors because
all these parties would likely need to sign off on these bylaws or operating agreements
now after that you can move into step number three which is to create your subsidiary
now there are two ways to transition into step number three so if you're starting a new company
from scratch and you can simply create a new llc as your umbrella company and then create
another new loc that would act as your subsidiary company and after you get these two entities set
up there's just one more step that you need to take in order to tie these two entities together
which we'll get into in a second right after we talk about the second way to transition
into a new loc because of course after working with so many people the opposite scenario is
true right like more often than not you already have an llc that acts as an operating company and
what you want to do is turn your existing llc into a subsidiary of your new umbrella company
and in this case what you need to do is create an llc that will act as your umbrella company
by following steps number one and step number two and now with your existing loc what you
need to do is create a new operating agreement or amend your operating agreement for your existing
loc so what you need to do is basically place a provision within your articles of incorporation
or your existing operating agreement stating that no changes can be made to the management
of the operating company or the subsidiary company without the umbrella companies approval
okay and now this essentially gives complete control to the umbrella company over the
management of its subsidiaries all right so if you already have your articles of incorporation or
operating agreement just simply go back and amend that and typically you can do that around your new
annual registration period for your loc and if you have multiple llc's like you have multiple
operating agreements and you're trying to tie it all together and you would just repeat step number
three to get them all under your new umbrella company your holding company your parent company
whatever you want to call it right all right so let's tie all of this together step number one
create a new llc that will act as your umbrella company step number two create bylaws that specify
the intent of the new loc which is to be a holding company and that's step number three
create a new operating llc or amend an existing llc to become a subsidiary of your new umbrella
company now if you're wondering exactly why you should start an umbrella or a holding company
then make sure you watch my video on should you start a holding company linked above or coming up
next because of course there are many advantages and some disadvantages that you need to be aware
of before you actually go about setting up a holding or umbrella company now i hope you
enjoyed this brief video on how to start an umbrella company step by step if you have any
questions make sure you put them in the comment section below and i'll try to get to as many as i
possibly can as always thank you so so much for watching and i'll see you in my next video you