The purpose of unifying several companies under one umbrella is to structure multiple business entities which would function as one. S.A.A.U.S is the holding company and has several security companies which function as subsidiary companies. Each company has its own bank and account records.
Although each company functions as a separate entity, the uniform remains the same. S.A.A.U.S really is one business entity with several different trade names. Some of these are Sectwin Security, Secfin Security, Usec Security and Trainsec Security. Each company specialises in a different security-related department, such as investigations, guarding, training and so forth. So, it’s relatively easy to co-market while minimizing the tax reporting requirements. This structure also saves time and money, and that is always good!
The holding company usually doesn’t produce goods or services, or take part in daily operations of the business. Instead, it often owns assets that subsidiary companies use.
Business owners usually consider setting up a holding company and one or more subsidiaries to help structure their business as it grows. This is because the holding company can provide greater safeguards against risks, and streamlines operations for a business that’s still growing and diversifying.
THE ADVANTAGES OF THE STRUCTURE FOR BUSINESS ARE:
The unified structure protects our assets, such as property, intellectual property and equipment. The subsidiaries then take on the daily operations of the business and its trading responsibilities. The valuable assets held by the holding company are thus protected.
It Reduces Business Risk
Where S.A.A.U.S holds the valuable assets and is an entity separate from the operating companies, the risk of losing those assets is minimised if the operating company performs poorly.
It Minimises Tax
S.A.A.U.S is set up to reduce the amount of tax that the group as a whole has to pay.
It Ensures Central Control
Usually, the management of a holding company and the subsidiary companies is controlled by the directors of the holding company. This provides a cohesive and centralised management structure that allows S.A.A.U.S to maximise its performance and growth.
It Concentrates Property Assets
As the central holder of property assets, S.A.A.U.S can deal with those assets for the benefit of the group as a whole. Subsequently, trading companies do not need to take the risk and time to do so.
It Creates Flexibility for Business Growth and Development
Having the valuable assets held by S.A.A.U.S allows the group to:
- Diversify more efficiently;
- Invest in new ventures; and
- Exit ventures, if needed.
The operating companies can take these steps without risk to the holding company and the group’s assets. SA.A.U.S gives greater power to the group and subsidiaries to invest in larger projects.
It Results in Succession Planning
S.A.A.U.S can ensure continuity of the business when key people from the operating companies leave.
The Key Takeaways
Setting up S.A.A.U.S as a holding company can helps the business grow while minimising some of the risks that come with this growth. We can gain benefits in:
- The operation of the company;
- Tax minimisation; and
- Financial advantages.
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