breaking a business up into 2 companies to lower liability?

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PostPosted: Thu Nov 17, 2011 9:38 pm   Post subject: breaking a business up into 2 companies to lower liability?  

Anyone heard of taking a company, breaking it into two separate corporations in order to lower the amount of income being generated by each company, and then having liability only on the one, which they pay alot less for because they're able to break up the sales? Seems stupid because you're going to have alot of other potential risks. So you can save a little bit of money, really in the scheme of things, it is not so much money!



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PostPosted: Tue Dec 27, 2011 12:33 pm   Post subject:   

A company can be broken up into not just 2 but multiple units, each of them a separate stand-alone entity or a subsidiary of the parent company. In such a case, companies can not only cut back on their tax bill, they also stand to gain advantages on multiple fronts.



Multinational companies such as Coca Cola and GE have units all over the world. If they choose to break up into domestic (US based) units and international units, they stand to make a lot of tax savings since the tax rates in the US might be significantly higher than those of the foreign locations.


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PostPosted: Thu Feb 23, 2012 2:32 pm   Post subject:   

Thanks for the reply blackmore, it is nice explanation from your side.



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