Holding company vs operating company
Why families often separate ownership (holdco) from day-to-day business risk (opco) — and how that maps to Elephant's entity registry.
Key facts
- A holding company owns assets or subsidiaries; an operating company runs the business that generates revenue and liability.
- Separate legal entities can compartmentalize liabilities, but title, contracts, guarantees, direct wrongdoing, and veil-piercing rules still matter.
- LLC economic interests may be assigned to a trust, but the operating agreement and state law determine whether governance rights transfer.
The simple picture
An operating company employs people, signs customer contracts, and takes on day-to-day risk. A holding company sits above it (or beside rental/investment assets) and owns equity, IP, or real estate. When something goes wrong at the operating level, the goal is that the family's other assets are not automatically on the table.
Delaware's LLC Act generally shields members and managers from company obligations. Delaware courts disregard entity separateness only in limited circumstances involving fraud or similar injustice. Keep title, contracts, accounts, and records aligned with the actual structure.
How this shows up in a family office
A family may use LLCs to hold real estate or investments while a separate entity runs an active business. LLC economic interests may be assigned to a trust, subject to the operating agreement. An assignee does not necessarily become a member or receive governance rights without authorization or required consent.
In Elephant, register each entity, track ownership percentages, and link assets titled to the entity so the inventory matches the legal structure.
References
This guide is educational only and is not legal, tax, or investment advice. Laws vary by state and change over time; confirm current figures with the linked primary sources or a licensed professional in your state.
Related guides
LLC vs C-Corp vs S-Corp
How LLC, C-corporation, and S-corporation treatment differ for family holdings and operating companies.
Funding your entity
Formation papers do not move assets by themselves — how to title property, assign interests, and keep the inventory honest.
Entity formation checklist
The practical sequence from name clearance through bank account — the same steps Elephant tracks in the entity checklist.
Home state vs Delaware incorporation
When forming in Delaware actually helps — and when a solo founder in Georgia (or any home state) is better off incorporating locally.
Put it into practice
Elephant turns these documents into a guided, state-aware workflow — drafted, executed, and stored in one encrypted vault.
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