Is it silly and unclear to distinguish between a branch and a subsidiary? Today, let's talk about the difference between a branch and a subsidiary.
First, consider taxes. If there is no profit or even loss for a long time at the beginning of the establishment of a branch, the establishment of a branch office can save taxes. If the branch is able to make a profit relatively quickly in the early stage of opening, then the establishment of a subsidiary can get the convenience of operating as an independent legal person, and can also enjoy the benefit of deferred tax on undistributed profits.
Second, consider debt. There is "risk isolation" between the parent and subsidiary, while the head office is a community with a shared future of "one prosperity and one loss". If the business of the subordinate organization has a higher risk, it is more appropriate to set up a subsidiary.
Finally, there are management costs to consider. The pre-branch establishment and deregistration process is relatively simple, and the cost of setting up a branch is relatively low.
In addition, there are significant differences between branches and subsidiaries in terms of legal, tax, financial, etc. Therefore, when choosing a branch or subsidiary, it is necessary to comprehensively consider the company's actual situation, business needs, tax policies and other factors to make the most reasonable decision.
By understanding the difference between a branch office and a subsidiary, we can better choose the right organizational form for our company.