--- title: THE BENEFITS OF CREATING A HOLDING COMPANY description: "Once your business gets to a certain size and turnover, there’s real value in assessing the company structure and how to make things more tax-efficient.\n\nSetting up a holding company is one way to start creating an ordered and effective group structure. And by moving any surplus cash up from your trading company to your new holding company, you protect your profits and can, potentially, reduce your tax liabilities.\n\nSeparating your trading and investment\n\nWhen all your surplus cash, profits and personal shares are wrapped up in one single company, that can often cause problems further down the line. With all your eggs in one basket, there’s an inherent risk built into your company structure and, in a worst-case scenario, if the business fails, you could end up losing everything.\n\nBut with separate trading and holding companies, held within a defined group structure, you can begin to protect your company and your own personal interests.\n\nTo start the process of creating a group structure:\n\nCreate a new holding company – a holding company is the ‘parent’ at the top of your group structure. This entity is entirely separate to the trading business where your shares are held and will sit at the very top of the structure, with your trading company and any other subsidiaries beneath it.\nTransfer your trading shares – the next step is to transfer your existing trading company shares over to the holding company, in exchange for shares in the holding company. This gives you control over the holding company, but also enough share rights to also control the trading business as well.\nMove your profits – excess cash can be moved from the trading company to the holding company in a tax-efficient manner, which protects any profits by ring-fencing them within your newly created holding company. And if the trading company were to fail, for whatever reason, these profits are protected and safe.\nAs your business interests grow, you can add further subsidiary companies to this basic group structure, presenting an organised structure to the local revenue office and also reducing the potential risk within the wider business.\n\nTalk to us setting up a group structure\n\nIf you want to protect the long-term future of your business and investments, we can help you create a robust group structure – safeguarding the future of your business and the profits you’ve built up" image: https://web.archive.org/web/20230129003137im_/https://balanceca.nz/wp-content/uploads/2020/02/3OfcTheoyubzRCpPbTavnz-sharon-mccutcheon-QMqE4Ckh2zI-unsplash-1024x683.jpg --- [![Ecom](https://balanceca.nz/hubfs/raw_assets/public/codfina/images/image_web/Logo_1.png)](https://balanceca.nz/) - [Home](https://balanceca.nz/) [![Ecom](https://balanceca.nz/hs-fs/hubfs/raw_assets/public/codfina/images/image_web/startup.png?width=60&name=startup.png) Start-ups](https://balanceca.nz/start-ups) [![Established](https://balanceca.nz/hs-fs/hubfs/raw_assets/public/codfina/images/image_web/establishedbusinesses.png?width=60&name=establishedbusinesses.png) Established Businesses](https://balanceca.nz/established-businesses) [![Agricultural](https://balanceca.nz/hs-fs/hubfs/raw_assets/public/codfina/images/image_web/agriculturalbusinesses.png?width=60&name=agriculturalbusinesses.png) Agricultural Businesses](https://balanceca.nz/agricultural-businesses) - [About](https://balanceca.nz/about-us) - [Services](https://balanceca.nz/services) [![image](https://balanceca.nz/hubfs/raw_assets/public/codfina/images/image_web/services_1.png) Annual Accounting & Tax Services](https://balanceca.nz/services#nav_f4) [![image](https://balanceca.nz/hubfs/raw_assets/public/codfina/images/image_web/services_2.png) Business Support Services](https://balanceca.nz/services#nav_f4) [![image](https://balanceca.nz/hubfs/raw_assets/public/codfina/images/image_web/services_3.png) Business Development](https://balanceca.nz/services#nav_f4) [![image](https://balanceca.nz/hubfs/raw_assets/public/codfina/images/image_web/services_4.png) Business Planning](https://balanceca.nz/services#nav_m4) [![image](https://balanceca.nz/hubfs/raw_assets/public/codfina/images/image_web/services_5.png) Cashflow Management](https://balanceca.nz/services#nav_m4) [![image](https://balanceca.nz/hubfs/raw_assets/public/codfina/images/image_web/services_6.png) Accountability Coaching](https://balanceca.nz/services#nav_m4) [![image](https://balanceca.nz/hubfs/raw_assets/public/codfina/images/image_web/services_7.png) Succession Planning](https://balanceca.nz/services#nav_m4) [![image](https://balanceca.nz/hubfs/raw_assets/public/codfina/images/image_web/services_8.png) Organisational Review](https://balanceca.nz/services#nav_b3) [![image](https://balanceca.nz/hubfs/raw_assets/public/codfina/images/image_web/services%20icon-9.png) Governance](https://balanceca.nz/services#nav_b3) [![](https://balanceca.nz/hubfs/raw_assets/public/codfina/images/image_web/services-10-01.png) Specialist Māori Sector Services](https://balanceca.nz/services#nav_f4) [![](https://balanceca.nz/hubfs/raw_assets/public/codfina/images/image_web/11_Connections.png) Connections](https://balanceca.nz/services#nav_b3) # BALANCE Take control of your finances with BalanceCA, your trusted partner for all your accounting and financial needs. 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[Learn More](https://balanceca.nz/income-tax-cal) - [Payment](https://balanceca.nz/Payments) - [Contact us](https://balanceca.nz/contact-us) [![](https://balanceca.nz/hubfs/raw_assets/public/codfina/assets/imgs/page/image_web/Coffee.png) Grab a coffee](https://balanceca.nz/Booking) [![IORI](https://balanceca.nz/hubfs/raw_assets/public/codfina/assets/imgs/page/image_web/Logo1.png)](https://balanceca.nz/) - Home - [About](https://balanceca.nz/about-us) - Services - [Blogs](https://balanceca.nz/blogs) - Calculators - [Payment](https://balanceca.nz/Payments) - [Contact us](https://balanceca.nz/contact-us) - [My Profile](https://balanceca.nz/blogs/login.html) - Work Preferences - My Boosted Shots - My Collections - Account Settings - Go Pro - [Sign Out](https://balanceca.nz/blogs/register.html) ## THE BENEFITS OF CREATING A HOLDING COMPANY Tags: [Marketing](https://balanceca.nz/blogs/tag/marketing) [Business](https://balanceca.nz/blogs/tag/business) --- ![Balance CA](https://balanceca.nz/hubfs/kamato-1.png) [Balance CA](https://balanceca.nz/blogs/author/balance-ca) Updated: June 05, 2023 Jan 20, 2024 4:36:43 PM --- ![](https://web.archive.org/web/20230129003137im_/https://balanceca.nz/wp-content/uploads/2020/02/3OfcTheoyubzRCpPbTavnz-sharon-mccutcheon-QMqE4Ckh2zI-unsplash-1024x683.jpg) Once your business gets to a certain size and turnover, there’s real value in assessing the company structure and how to make things more tax-efficient. Setting up a holding company is one way to start creating an ordered and effective group structure. And by moving any surplus cash up from your trading company to your new holding company, you protect your profits and can, potentially, reduce your tax liabilities. **Separating your trading and investment** When all your surplus cash, profits and personal shares are wrapped up in one single company, that can often cause problems further down the line. With all your eggs in one basket, there’s an inherent risk built into your company structure and, in a worst-case scenario, if the business fails, you could end up losing everything. But with separate trading and holding companies, held within a defined group structure, you can begin to protect your company and your own personal interests. To start the process of creating a group structure: - **Create a new holding company** – a holding company is the ‘parent’ at the top of your group structure. This entity is entirely separate to the trading business where your shares are held and will sit at the very top of the structure, with your trading company and any other subsidiaries beneath it. - **Transfer your trading shares** – the next step is to transfer your existing trading company shares over to the holding company, in exchange for shares in the holding company. This gives you control over the holding company, but also enough share rights to also control the trading business as well. - **Move your profits** – excess cash can be moved from the trading company to the holding company in a tax-efficient manner, which protects any profits by ring-fencing them within your newly created holding company. And if the trading company were to fail, for whatever reason, these profits are protected and safe. As your business interests grow, you can add further subsidiary companies to this basic group structure, presenting an organised structure to the local revenue office and also reducing the potential risk within the wider business. **Talk to us setting up a group structure** If you want to protect the long-term future of your business and investments, we can help you create a robust group structure – safeguarding the future of your business and the profits you’ve built up ![image](https://balanceca.nz/hubfs/raw_assets/public/codfina/images/image_web/Logo_1.png) ##### Balance Whanganui - [0800 480 062](tel:+640800480062) [06 348 0062](tel:+64063480062) - [whanganui@balanceca.nz](mailto:whanganui@balanceca.nz) - 10 Dublin Street, Whanganui, 4500 PO Box 670, Whanganui, 4540 ##### Balance New Plymouth - [06 769 5389](tel:+64067695389) - [newplymouth@balanceca.nz](mailto:newplymouth@balanceca.nz) - 141 Powderham Street PO Box 593, New Plymouth Central, New Plymouth 4310 ##### Balance Stratford - [06 765 6156](tel:+64067656156) - [stratford@balanceca.nz](mailto:stratford@balanceca.nz) - 199 Broadway, Stratford, 4352 PO Box 670, Stratford, 4352 Balance Official 2026. All rights reserved. [mailto:hello@balanceca.nz](mailto:hello@balanceca.nz) [tel:+640800480062](tel:+640800480062) ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Balance CA", "url" : "https://balanceca.nz/blogs/author/balance-ca" }, "dateModified" : "2024-01-20T21:36:43.805Z", "datePublished" : "2024-01-20T21:36:43.000Z", "headline" : "THE BENEFITS OF CREATING A HOLDING COMPANY", "image" : [ "https://web.archive.org/web/20230129003137im_/https://balanceca.nz/wp-content/uploads/2020/02/3OfcTheoyubzRCpPbTavnz-sharon-mccutcheon-QMqE4Ckh2zI-unsplash-1024x683.jpg" ], "mainEntityOfPage" : { "@id" : "https://balanceca.nz/blogs/the-benefits-of-creating-a-holding-company", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject" } } } ```