How do a holding company and an operating company work together?
When your sole proprietorship grows, choosing a private limited company (BV) as its legal structure is a logical step. Depending on your activities, you can also choose to place one or more operating companies under a holding company. This makes it clearer to your clients which company they are dealing with. For example, you can have separate operating companies for different services or target groups, such as business and private customers.
It is important to organise this structure properly so that the business runs smoothly.
Holding and operating companies explained
If you choose a holding company with one or more operating companies, the holding company is the parent company. This BV owns the operating companies but does not carry out the operational work itself. Clients generally do not do business with the holding company, but with one of its operating companies. The holding company accumulates assets, for example through dividends from the operating companies.
It is also used for investments in the business and to build up the owners’ retirement provision.
The operating companies are the BVs where the actual work takes place. These are the companies with which clients enter into agreements for the supply of goods or services. The client receives an invoice from the operating company. Complaints, payment collection and other client contacts are handled by that company. The holding company is the actual owner of the business; the operating company performs the work.
See MrKantoor’s article on business ownership structure charts for an explanation of that specific subject.
A holding company and operating company at the same address
It is possible to accommodate a holding company and one or more operating companies at the same address and use a virtual office’s services for the entire business. However, the companies must form a logical structure, and it must be clear what each individual BV does. The use of the address must also match the information communicated to clients.
Make sure your companies list the same address not only at the KvK but also on your website and in other communications. Business address providers do not welcome unclear structures where it is uncertain what a BV does, for whom or why. If too many uncertainties arise during your application, you will be asked for clarification or your application will be rejected.
An example of a holding company with operating companies
To clarify the above, consider an example of a holding company with operating companies. Suppose an entrepreneur runs a successful plumbing business and wants to expand into installing central heating boilers and heat pumps. A holding structure would then be logical. The holding company might be called Cornelissen BV, with two operating companies beneath it: Cornelissen Loodgietersservice BV and Cornelissen Verwarmingsservice BV.
The holding company focuses exclusively on shareholdings, building assets and arranging suitable retirement provision for the shareholders. The operating companies generate revenue—or at least that is the intention—and thereby make a profit.
Why choose a holding and operating company structure?
This structure is certainly not limited to businesses with multi-million-euro revenues. The advantages are clear. The holding company owns the shares, while the operating companies are responsible for work in their own specific fields. Business risks remain with the operating companies as far as possible. If one operating company performs poorly, the other operating companies are unaffected, or at least affected less.
Profits can be transferred to the holding company, for example to fund investments that help the business grow further.
Business address services for a holding company with operating companies
You can apply for a business postal address for your holding company and one or more operating companies at a virtual office such as MrKantoor. To assess the application properly, the virtual office needs insight into the business structure. This is why the structure chart mentioned earlier is an important part of the information you must supply.
It must also be clear which individuals are responsible for the business. You can submit an application for several BVs, for which a personalised quote is offered. You cannot transfer liability for your business to MrKantoor. The agreement solely concerns permission to use a postal address to receive business mail and keep your home address private in the Business Register.
When applying, it is important that MrKantoor knows which parts of a BV will use the business registration address. You may only use the address for the companies included in your application. You can, of course, add another operating company later by submitting an additional application. Removing a company is also possible. At the end of the agreed contract period, you can terminate the service for an operating company or, if you wish, for the holding company.
