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How to create a company subsidiary

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  • How to create a company subsidiary

    How does one launch a new division/subsidiary within an established company and do you need separate business licenses and or EIN for each subsidiary?

  • #2
    Re: How to create a company subsidiary

    Subsidiaries can be formed in different ways and for various reasons. A corporation can form a subsidiary either by purchasing a controlling interest in an existing company or by creating the company itself. When a corporation acquires an existing company, forming a subsidiary can be preferable to a merger because the parent corporation can acquire a controlling interest with a smaller investment than a merger would require. In addition, the approval of the stockholders of the acquired firm is not required as it would be in the case of a merger.

    When a company is purchased, the parent corporation may determine that the acquired company's name recognition in the market merits making it a subsidiary rather than merging it with the parent. A subsidiary may also produce goods or services that are completely different from those produced by the parent corporation. In that case it would not make sense to merge the operations.
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    • #3
      Re: How to create a company subsidiary

      hmmmmmmmmm not sure but i can say that.....subsidiaries are separate, separate legal entities for the purposes of taxes and regulation. for this reason, they be at variance from divisions, which are businesses fully integrated within the main company, and not legally or otherwise distinct from it....
      thank you
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      • #4
        Re: How to create a company subsidiary

        Hello
        Subsidiaries can be formed in different ways and for various reasons. A corporation can form a subsidiary either by purchasing a controlling interest in an existing company or by creating the company itself. When a corporation acquires an existing company, forming a subsidiary can be preferable to a merger because the parent corporation can acquire a controlling interest with a smaller investment than a merger would require. In addition, the approval of the stockholders of the acquired firm is not required as it would be in the case of a merger.

        Thanks
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        • #5
          Re: How to create a company subsidiary

          Corporations also create subsidiaries for the specific purpose of limiting their liability in connection with a risky new business. The parent and subsidiary remain separate legal entities, and the obligations of one are separate from those of the other. Nevertheless, if a subsidiary becomes financially insecure, the parent corporation is often sued by creditors. In some instances courts will hold the parent corporation liable, but generally the separation of corporate identities immunizes the parent corporation from financial responsibility for the subsidiary's liabilities.

          One disadvantage of the parent-subsidiary relationship is the possibility of multiple taxation. Another is the duty of the parent corporation to promote the subsidiary's corporate interests, to act in its best interest, and to maintain a separate corporate identity. If the parent fails to meet these requirements, the courts will perceive the subsidiary as merely a business conduit for the parent, and the two corporations will be viewed as one entity for liability purposes.
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          • #6
            Re: How to create a company subsidiary

            Hello
            A subsidiary corporation or company is one in which another, generally larger, corporation, known as the parent corporation, owns all or at least a majority of the shares. As the owner of the subsidiary, the parent corporation may control the activities of the subsidiary. This arrangement differs from a merger, in which a corporation purchases another company and dissolves the purchased company's organizational structure and identity.

            Subsidiaries can be formed in different ways and for various reasons. A corporation can form a subsidiary either by purchasing a controlling interest in an existing company or by creating the company itself. When a corporation acquires an existing company, forming a subsidiary can be preferable to a merger because the parent corporation can acquire a controlling interest with a smaller investment than a merger would require. In addition, the approval of the stockholders of the acquired firm is not required as it would be in the case of a merger.

            When a company is purchased, the parent corporation may determine that the acquired company's name recognition in the market merits making it a subsidiary rather than merging it with the parent. A subsidiary may also produce goods or services that are completely different from those produced by the parent corporation. In that case it would not make sense to merge the operations.

            Corporations that operate in more than one country often find it useful or necessary to create subsidiaries. For example, a multinational corporation may create a subsidiary in a country to obtain favorable tax treatment, or a country may require multinational corporations to establish local subsidiaries in order to do business there.
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            • #7
              Re: How to create a company subsidiary

              Hello Friends,
              LMS International, the worldwide leader in Testing systems, CAE software and engineering services for functional performance engineering, today announced the launch of a new subsidiary company, NOESIS Solutions. The new company will focus on the Process Integration and Design Optimization (PIDO) market, a segment predicted to be one of the fastest growing in the mechanical design automation market over the next decade. NOESIS Solutions will further build on the strong capabilities of the LMS Optimus product that support engineers in automating their analysis processes, in quickly investigating multiple design options, and finding the most ro**** designs for product lifecycle quality.“Major manufacturers around the world adopted LMS Optimus and recognize it as an excellent product and a superior technology platform for the PIDO market”, says Dr. Urbain Vandeurzen, Chairman and CEO of LMS, International. “Creating a separate company with its own identity and a clear focus will assure an aggressive drive to become the market leader in the segment. Unlike most start-ups, NOESIS Solutions will have the benefit of a mature technology, a strong customer base and a worldwide distribution in place, right from the start.”“NOESIS, the ancient Greek word for knowledge and understanding, reflects the mission of our new company – empowering our customers in gaining deeper insight in their design, and quickly finding the most optimal and ro**** design option”, says Hans Wynendaele, President of NOESIS Solutions. Hans Wynendaele has entrepreneurial experience as a founder of Numerical Integration Technologies, which was acquired by LMS in 1993, and subsequent senior management experience in a number of key positions within LMS, including Vice President of the CAE Division. NOESIS Solutions will continue to leverage LMS distribution into the major mechanical industries but, in parallel, develop additional channels into new markets. LMS International will further market the Optimus technology, and will integrate Optimus functionality in LMS Virtual.Lab, its integrated environment for functional performance engineering.
              Thanks.
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              • #8
                Re: How to create a company subsidiary

                Hello friends

                A subsidiary, in business matters, is an entity that is controlled by a separate higher entity[citation needed]. The controlled entity is called a company, corporation, or limited liability company; and in some cases can be a government or state-owned enterprise, and the controlling entity is called its parent (or the parent company). The reason for this distinction is that a lone company cannot be a subsidiary of any organization; only an entity representing a legal fiction as a separate entity can be a subsidiary. Contrary to popular belief,[by whom?] a parent company does not have to be the larger or "more powerful" entity;[citation needed] it is possible for the parent company to be smaller than a subsidiary,[citation needed] or the parent may be larger than some or all of its subsidiaries (if it has more than one).[citation needed] The parent and the subsidiary do not necessarily have to operate in the same locations, or operate the same businesses, but it is also possible that they could conceivably be competitors in the marketplace. (Hewlett Packard is the parent company of Compaq, but both compete against each other in the sale of desktop computers.) Also, because a parent company and a subsidiary are separate entities, it is entirely possible for one of them to be involved in legal proceedings, bankruptcy, tax delinquency, indictment and/or under investigation, while the other is not.
                The most common way that control of a subsidiary, is achieved is through the ownership of shares in the subsidiary by the parent. These shares give the parent the necessary votes to determine the composition of the board of the subsidiary, and so exercise control. This gives rise to the common presumption that 50% plus one share is enough to create a subsidiary. There are, however, other ways that control can come about, and the exact rules both as to what control is needed, and how it is achieved, can be complex (see below). A subsidiary may itself have subsidiaries, and these, in turn, may have subsidiaries of their own. A parent and all its subsidiaries together are called a "group", although this term can also apply to cooperating companies and their subsidiaries with varying degrees of shared ownership.
                Subsidiaries are separate, distinct legal entities for the purposes of taxation and regulation. For this reason, they differ from divisions, which are businesses fully integrated within the main company, and not legally or otherwise distinct from it.[citation needed]
                Subsidiaries are a common feature of business life, and most if not all major businesses organize their operations in this way.[citation needed] Examples include holding companies such as Berkshire Hathaway as in this listing of its subsidiaries, Time Warner, or Citigroup; as well as more focused companies such as IBM, or Xerox Corporation. These, and others, organize their businesses into national or functional subsidiaries, sometimes with multiple levels of subsidiaries.

                Thanks to all friends
                Ppi

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                • #9
                  Re: How to create a company subsidiary

                  Hi guys

                  A subsidiary, in business matters, is an entity that is controlled by a separate higher entity[citation needed]. The controlled entity is called a company, corporation, or limited liability company; and in some cases can be a government or state-owned enterprise, and the controlling entity is called its parent (or the parent company). The reason for this distinction is that a lone company cannot be a subsidiary of any organization; only an entity representing a legal fiction as a separate entity can be a subsidiary. Contrary to popular belief,[by whom?] a parent company does not have to be the larger or "more powerful" entity;[citation needed] it is possible for the parent company to be smaller than a subsidiary,[citation needed] or the parent may be larger than some or all of its subsidiaries (if it has more than one).[citation needed] The parent and the subsidiary do not necessarily have to operate in the same locations, or operate the same businesses, but it is also possible that they could conceivably be competitors in the marketplace. (Hewlett Packard is the parent company of Compaq, but both compete against each other in the sale of desktop computers.) Also, because a parent company and a subsidiary are separate entities, it is entirely possible for one of them to be involved in legal proceedings, bankruptcy, tax delinquency, indictment and/or under investigation, while the other is not.
                  The most common way that control of a subsidiary, is achieved is through the ownership of shares in the subsidiary by the parent. These shares give the parent the necessary votes to determine the composition of the board of the subsidiary, and so exercise control. This gives rise to the common presumption that 50% plus one share is enough to create a subsidiary. There are, however, other ways that control can come about, and the exact rules both as to what control is needed, and how it is achieved, can be complex (see below). A subsidiary may itself have subsidiaries, and these, in turn, may have subsidiaries of their own. A parent and all its subsidiaries together are called a "group", although this term can also apply to cooperating companies and their subsidiaries with varying degrees of shared ownership.
                  Subsidiaries are separate, distinct legal entities for the purposes of taxation and regulation. For this reason, they differ from divisions, which are businesses fully integrated within the main company, and not legally or otherwise distinct from it.[citation needed]
                  Subsidiaries are a common feature of business life, and most if not all major businesses organize their operations in this way.[citation needed] Examples include holding companies such as Berkshire Hathaway as in this listing of its subsidiaries, Time Warner, or Citigroup; as well as more focused companies such as IBM, or Xerox Corporation. These, and others, organize their businesses into national or functional subsidiaries, sometimes with multiple levels of subsidiaries.


                  Thanks for sharing with us
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                  • #10
                    Re: How to create a company subsidiary

                    Your company can have a subsidiary and it may have the same directors and ethics doesn't really come into it as many companies have a premium product selling alongside a more basic version - Toyota and Lexus being one example
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                    • #11
                      Re: How to create a company subsidiary

                      A subsidiary is a business that is controlled by another business or "parent" company. A company may choose to set up a subsidiary if it is expanding the mission or product line of the company and wants to take advantage of the legal and tax benefits of a subsidiary. Considerable planning and the filing of some legal documents is required when setting up a subsidiary.
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                      • #12
                        Re: How to create a company subsidiary

                        Hello
                        t happens every day: One company decides to buy another or it enters into a new line of business and comes face-to-face with the question of whether to structure the new venture as a separate legal entity—a subsidiary—or simply fold it into the company’s existing operations. For CPAs whose employers or clients may be growing beyond a single-entity structure, this article explains when it makes sense to take the subsidiary route.

                        Certain routine developments can trigger the need for a subsidiary. Often, says CPA and tax attorney Mike Farra at Miami-based CPA firm Morrison, Brown, Argiz & Co., it will be the launch of a new venture that has different risk characteristics than the company’s existing line of business or the opening of operations in a new state or foreign country. Other times, companies need to form subsidiaries to facilitate the potential sale of part of the company.

                        From an accounting perspective, creating a subsidiary generally makes sense under any of these conditions because it allows companies to enjoy substantial tax benefits and creditor protections. There are costs involved—hiring attorneys to draft and file the necessary legal documents, for example, and paying CPAs to handle marginally more complex tax returns. But those costs may be measured in as little as thousands of dollars for smaller companies, and even when costs are higher, they almost always are nominal compared with potential rewards from legal protections and tax benefits.
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                        • #13
                          Re: How to create a company subsidiary

                          Hello
                          The most common way that control of a subsidiary, is achieved is through the ownership of shares in the subsidiary by the parent. These shares give the parent the necessary votes to determine the composition of the board of the subsidiary, and so exercise control. This gives rise to the common presumption that 50% plus one share is enough to create a subsidiary. There are, however, other ways that control can come about, and the exact rules both as to what control is needed, and how it is achieved, can be complex (see below). A subsidiary may itself have subsidiaries, and these, in turn, may have subsidiaries of their own. A parent and all its subsidiaries together are called a "group", although this term can also apply to cooperating companies and their subsidiaries with varying degrees of shared ownership.

                          Subsidiaries are separate, distinct legal entities for the purposes of taxation and regulation. For this reason, they differ from divisions, which are businesses fully integrated within the main company, and not legally or otherwise distinct from it.[citation needed]

                          Subsidiaries are a common feature of business life, and most if not all major businesses organize their operations in this way.[citation needed] Examples include holding companies such as Berkshire Hathaway as in this listing of its subsidiaries, Time Warner, or Citigroup; as well as more focused companies such as IBM, or Xerox Corporation. These, and others, organize their businesses into national or functional subsidiaries, sometimes with multiple levels of subsidiaries.
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                          • #14
                            Re: How to create a company subsidiary

                            Hi guys

                            A subsidiary, in business matters, is an entity that is controlled by a separate higher entity[citation needed]. The controlled entity is called a company, corporation, or limited liability company; and in some cases can be a government or state-owned enterprise, and the controlling entity is called its parent (or the parent company). The reason for this distinction is that a lone company cannot be a subsidiary of any organization; only an entity representing a legal fiction as a separate entity can be a subsidiary. Contrary to popular belief,[by whom?] a parent company does not have to be the larger or "more powerful" entity;[citation needed] it is possible for the parent company to be smaller than a subsidiary,[citation needed] or the parent may be larger than some or all of its subsidiaries (if it has more than one).[citation needed] The parent and the subsidiary do not necessarily have to operate in the same locations, or operate the same businesses, but it is also possible that they could conceivably be competitors in the marketplace. (Hewlett Packard is the parent company of Compaq, but both compete against each other in the sale of desktop computers.) Also, because a parent company and a subsidiary are separate entities, it is entirely possible for one of them to be involved in legal proceedings, bankruptcy, tax delinquency, indictment and/or under investigation, while the other is not.

                            Thanks


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                            • #15
                              Re: How to create a company subsidiary

                              Hi guys

                              A subsidiary, in business matters, is an entity that is controlled by a separate higher entity[citation needed]. The controlled entity is called a company, corporation, or limited liability company; and in some cases can be a government or state-owned enterprise, and the controlling entity is called its parent (or the parent company). The reason for this distinction is that a lone company cannot be a subsidiary of any organization; only an entity representing a legal fiction as a separate entity can be a subsidiary. Contrary to popular belief,[by whom?] a parent company does not have to be the larger or "more powerful" entity;[citation needed] it is possible for the parent company to be smaller than a subsidiary,[citation needed] or the parent may be larger than some or all of its subsidiaries (if it has more than one).[citation needed] The parent and the subsidiary do not necessarily have to operate in the same locations, or operate the same businesses, but it is also possible that they could conceivably be competitors in the marketplace. (Hewlett Packard is the parent company of Compaq, but both compete against each other in the sale of desktop computers.) Also, because a parent company and a subsidiary are separate entities, it is entirely possible for one of them to be involved in legal proceedings, bankruptcy, tax delinquency, indictment and/or under investigation, while the other is not.

                              Thanks

                              Diesel Models

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