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# Does a holding company help when you sell your firm?
- URL: https://blog.sellingyourcanadianbusiness.com/does-a-holding-company-help-when-you-sell-your-firm/
- Published: 2022-11-08T13:09:03.000Z
- Updated: 2026-08-14T18:56:19.000Z
- Description: What a holding company protects and enables before a sale, from creditor protection and tax planning to the Lifetime Capital Gains Exemption, and when it is worth setting up.
- Author: Karl E. Sigerist, Jr., ICD.D
- Tags: Articles Sell-Side, #review-excerpt-missing-2026-08-14

Is a holding company worth it for Canadian business owners?

As you prepare to sell or restructure, a holding company can offer strategic advantages for businesses of all sizes — not just large corporations. A holding company does not actively run operations; instead it holds ownership in other companies and assets, such as shares in your operating company, real estate, stocks, bonds and intellectual property. Whether the structure is worth the effort depends on your goals, business structure and future plans.

Benefits of a holding company

\- Asset and creditor protection — if your operating company faces a lawsuit or financial distress, creditors generally cannot reach the holding company's assets, provided the structure exists before any legal trouble (fraud can still pierce the corporate veil)  
\- Tax planning and savings — tax-free intercorporate dividends, income splitting with family shareholders (subject to strict rules), and lower corporate rates that let retained funds grow tax-efficiently  
\- Lifetime Capital Gains Exemption (LCGE) — can significantly reduce the capital gains tax owed when you sell your operating company, preserving wealth on exit  
\- Estate planning and succession — freeze the value of your operating-company shares and pass future growth to children or family while retaining control

Drawbacks to weigh

\- Incorporation costs — lawyers and accountants to set up the company and ensure compliance  
\- Ongoing maintenance — annual filings, corporate tax returns, financial statements and administrative support  
\- Potential double taxation — if poorly structured, the holding company's income and later dividends or gains can both be taxed  
\- Increased complexity — diverse investments mean more accounting, legal oversight and financial management

Before deciding, evaluate your goals and consult experienced legal, financial and tax advisors.

Key facts: is a holding company worth it?

A holding company holds assets and ownership rather than running operations  
Benefits: asset protection, tax-efficient dividends and income splitting, the LCGE, and estate planning  
Drawbacks: incorporation and maintenance costs, possible double taxation, and added complexity  
Set it up before any legal trouble and get professional legal, tax and financial advice first

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Disclaimer: This article is for general informational purposes only and does not constitute legal, tax or financial advice. Consult qualified advisors regarding your specific circumstances.