Subsidiary

[TheChem]

Hello. I'm in Georgia.

I think I know the answer, but wanted to confirm with you experts.

I have a parent company, but have formed another of similar interest. I want that company to be a subsidiary.

From my research, it appears that I don't have to file with the SOS of Georgia. I don't have to do anything. I can just put those monies into the parent company.

Is this correct? Thank you.

 

[quincy]

Hello. I'm in Georgia.

I think I know the answer, but wanted to confirm with you experts.

I have a parent company, but have formed another of similar interest. I want that company to be a subsidiary.

From my research, it appears that I don't have to file with the SOS of Georgia. I don't have to do anything. I can just put those monies into the parent company.

Is this correct? Thank you.

Will your subsidiary be located in Georgia?

A subsidiary is an independent legal entity so in setting it up you will follow the requirements for the state in which it will be located.

 

[Taxing Matters]

Hello. I'm in Georgia.

I think I know the answer, but wanted to confirm with you experts.

I have a parent company, but have formed another of similar interest. I want that company to be a subsidiary.

From my research, it appears that I don't have to file with the SOS of Georgia. I don't have to do anything. I can just put those monies into the parent company.

Is this correct? Thank you.

What kind of entity is the parent, what kind of entity is the second company, and importantly, who formed the second company — did you form it yourself or did you have the parent company do it?

Very generally a subsidiary is an entity that is by another company and legally separate from that company. For example, suppose Susan forms a corporation called Susan's Super Socks, Inc. (SSSI). She owns all of the stock of SSSI. She later wants to conduct a business selling gloves and wants that as a subsidiary corporation of SSSI to do that called Susan's Gorgeous Gloves, Inc. (SGGI). She would have SSSI be the incorporator for SGGI with the state and SSSI would own all the stock of SGGI. But in having that structure, she must take care that the two corporations are conducted as separate entities. When SGGI has profits to distribute to SSSI, it will pay a dividend to SSSI. The two corporations would each file their own tax returns, have their own bank accounts, etc.

That's just one example and depending on the entities used there will be some differences in how things work. But the key to remember is that if it is a subsidiary then it is a separate company from the parent and one that is owned by the parent, and has to be operated with those facts in mind.

 

[TheChem]

@quincy yes, the sub would be in GA.

@Taxing Matters I formed the sub and parent. Both are marketing companies.

Thank you for the examples.

Perhaps, I should have asked the question for what I’m hoping can occur than thinking a subsidiary would work.

I have company A (parent) and company B (subsidiary). Both are marketing companies. company A is general, and company B is a specific niche. If I’ve already registered company A with the GA SOS, is there any possible way to put company B somehow under that same company? So maybe it really isn’t a different company at all (I’d be fine with that)? Can I call company B something else, but it really be Company A? They are similar enough I’m really trying to just avoid separate financials, bank accounts, tax returns...

Edit: as a follow up, if I have to register company B, is there an allowed time period to register with the SOS if company B has already collected monies from clients?

Thank you both!

 

[quincy]

@quincy yes, the sub would be in GA.

@Taxing Matters I formed the sub and parent. Both are marketing companies.

Thank you for the examples.

Perhaps, I should have asked the question for what I’m hoping can occur than thinking a subsidiary would work.

I have company A (parent) and company B (subsidiary). Both are marketing companies. company A is general, and company B is a specific niche. If I’ve already registered company A with the GA SOS, is there any possible way to put company B somehow under that same company? So maybe it really isn’t a different company at all (I’d be fine with that)? Can I call company B something else, but it really be Company A? They are similar enough I’m really trying to just avoid separate financials, bank accounts, tax returns...

Edit: as a follow up, if I have to register company B, is there an allowed time period to register with the SOS if company B has already collected monies from clients?

Thank you both!

Instead of a subsidiary, Company B could be Company A doing business as (d/b/a) Company B.

A company can operate several different companies under its corporate "umbrella."

 

[LdiJ]

Instead of a subsidiary, Company B could be Company A doing business as (d/b/a) Company B.

A company can operate several different companies under its corporate "umbrella."

I agree but most companies who do that still keep separate books for each DBA, and then just combine the books for tax purposes. So, since the OP's main reason is not wanting to keep separate books, I cannot think of any way that he can accomplish that. Of course I suppose that he could just opt not to keep separate books, but then he will never actually know how either company is actually doing.

 

[TheChem]

@quincy thank you! Do I have to legally state anywhere Company A dba Company B? Or can I just list Company B as needed and internally have a document stating Company A dba Company B?

 

[quincy]

@quincy thank you! Do I have to legally state anywhere Company A dba Company B? Or can I just list Company B as needed and internally have a document stating Company A dba Company B?

Everything needs to be registered.

 

[TheChem]

@quincy @Taxing Matters @LdiJ

Thank you all for your help! It’s very informative!!

 

[quincy]

@quincy @Taxing Matters @LdiJ

Thank you all for your help! It’s very informative!!

You're welcome, TheChem. We appreciate the thanks.

Good luck with your business.

 

[Taxing Matters]

@quincy yes, the sub would be in GA.

@Taxing Matters I formed the sub and parent. Both are marketing companies.

Thank you for the examples.

Perhaps, I should have asked the question for what I’m hoping can occur than thinking a subsidiary would work.

I have company A (parent) and company B (subsidiary). Both are marketing companies. company A is general, and company B is a specific niche. If I’ve already registered company A with the GA SOS, is there any possible way to put company B somehow under that same company?

Yes. You own both companies. You could contribute the ownership interests in Company B to Company A so that Company A then owns Company B, making B a subsidiary of A. Whether that is a good idea depends on what kinds of entities they are (corporations, LLC, etc) and what you want to achieve.

Simply operating the niche part of it as a separate trade name (often referred to as using a DBA) of Company A as quincy mentioned is also a way you might go. Doing that means that you have just the one company but it uses different names for the two different businesses it does. Most states do require that you record the trade name so that the public can associate the trade name with the business that owns it. Other than that, operating with a trade name means everything is all done under the same entity, which has both benefits and drawbacks and whether you want a real subisidiary or use a trade name depends on what you really want to accomplish.

 

[quincy]

I recommend you sit down with a legal professional in your area for a discussion of your business plans.

We are always happy to provide general information but for advice and guidance that benefits you the most, the specifics need to be known. We cannot really get into specifics on this forum.