Set up a New Subsidiary

A subsidiary is a separate legal entity owned or controlled by a parent company. Unlike the parent organization, which acts as an overarching structure, a subsidiary operates independently with its own financial records, legal obligations, and tax responsibilities.

When creating a new subsidiary, it is essential to establish it as a distinct entity within the organizational structure. This allows for:

• Accurate financial tracking: Each subsidiary can maintain its own accounts and financial statements while still being consolidated under the parent company.

• Legal and tax compliance: Subsidiaries must follow local regulations and tax requirements, which may differ from those of the parent organization.

• Multi-currency support: A subsidiary can have its own functional currency, determining how transactions are recorded. However, financial consolidation may require currency conversions if the parent company reports in a different currency.

In many financial systems, subsidiaries are tagged in transactions such as contracts, journal entries, and invoices to ensure proper allocation. This distinction is critical for managing intercompany transactions, financial reporting, and compliance.

Set up your new subsidiary

To set up a new subsidiary:

1. Click the company icon in the top right corner of the screen.

2. Go to Organization Settings.

   
3. In the Subsidiaries section in the left menu, choose an entity. Then, select Entity details.

4. Complete the following fields in the Subsidiary Profile:

   • Logo: When uploading a logo or any additional image for the subsidiary, ensure you follow the requirements:mMaximum size: 1 MB, Minimum dimensions: 128 x 128 px, File format s: .png or .jpg

   • Legal Entity Name: Assign a unique legal name for the subsidiary (e.g., "Monsters, LLC").

   • Trade Name: Enter the trade name, which may be the same as the legal name in many cases.

   • Address Line 1: Provide the primary address (e.g., "123 Test Drive").

   • Address Line 2 (optional): This field can be used for additional address details if necessary.

   • Country: Select the country where the subsidiary operates (e.g., "United Kingdom of Great Britain and Northern Ireland").

   • City: Enter the city of the subsidiary's location (e.g., "London").

   • State (optional): Include the state if applicable. This may not be needed for all countries.

   • Zip Code: Provide the postal code for the subsidiary’s address (e.g., "123456").

   • Tax ID (optional): Include the tax identification number, if applicable, to comply with local regulations (e.g., "123456798").

   • Timezone: Specify the timezone the subsidiary operates in (e.g., "Etc/UTC").

   • Local Currency: Select the local currency that the subsidiary will use for its transactions (e.g., "GBP").

   
5. Click Save Changes.

Accounting Settings

To configure the accounting settings:

1. Select Accounting in the left menu.

2. Define intercompany accounts to manage transactions between entities:

   • Receivable (Due From): The account recording amounts owed to the subsidiary (e.g., Due from UK). Typically an asset account.

   • Payable (Due To): The account recording amounts owed by the subsidiary (e.g., Due to UK). Typically a liability account.

   
3. Click Save Changes.

Invoicing Settings

To configure the invoicing settings:

1. Select Invoices in the left menu.

2. Fill in the Invoicing Account Information. This is the account that will appear on invoices in the payment instructions.

   • Bank Name: Enter the bank's name where the subsidiary’s invoicing account is held.

   • Account Number: Input the account number for the subsidiary's bank account.

   • Routing Number: Specify the routing number necessary for processing payments.

   • Bank Address: Provide the address of the subsidiary’s bank.

   • Swift Code - International: Enter the international SWIFT code for cross-border transactions, if applicable.

   • Default Payment Terms: Set the default payment terms for invoices (e.g., "Due on Receipt").

   • Payment Instructions: Include specific instructions that customers should follow when making payments.

   • Show Bank Details on Invoices: Check the box if you want to display bank details on the invoices sent to customers.

   • Enable online payments for new customers (requires Stripe integration): If applicable, check the box to enable online payments for new customers.

3. Check the option under the Taxes section to hide tax details on invoices if the total tax amount is $0.

   

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