Expanding your business often involves creating new entities in different markets. One of the most common structures is a subsidiary company.
Business owners, investors, and managers need to understand subsidiaries if they want to grow their business effectively.
In this guide, we’ll explore what is a subsidiary company, how it works, its advantages and disadvantages, and real-life examples.
We’ll also show how Remire simplifies managing subsidiaries globally. It helps you handle compliance, finances, and operations efficiently. This lets you grow your business while keeping complete control.
Let’s explore about subsidiary more!
What Is a Subsidiary Company?
A parent company owns or controls a subsidiary.. Ownership can be full (100%) or majority (more than 50%). Although subsidiaries operate on their own, they usually follow the parent company’s strategies.
Examples of Parent and Subsidiary Companies
| Parent Company | Subsidiary | Industry |
|---|---|---|
| Apple | Beats Electronics | Electronics |
| Microsoft | Social Media | |
| Amazon | Whole Foods | Retail |
| Alphabet | Waymo | Automotive Tech |
| Nestlé | Nespresso | Food & Beverages |
Using Remire, parent companies can monitor all subsidiaries, regardless of location, ensuring consistency in reporting and compliance.
Is a Subsidiary Its Own Company?
Yes. A subsidiary is legally a separate entity. It can:
- Enter contracts independently
- Own assets
- Hire employees
However, the parent company retains decision-making authority and strategic control.
How a Subsidiary Company Works?
- The parent company controls major decisions.
- Subsidiaries often have their own management teams.
- Profits and losses are either shared with or reported to the parent.
Example: Apple owns Beats Electronics. Beats runs independently but aligns its strategy with Apple’s overall goals.
Companies like Remire help parent companies monitor subsidiaries’ financials, HR processes, and compliance seamlessly.
Financial and Operational Insights of a Subsidiary
Subsidiary Company Financials
- Parent companies often consolidate the financial statements of subsidiaries.
- Helps track profits, losses, and overall performance.
- Crucial for investors and regulatory compliance.
Solutions like Remire automate the consolidation of subsidiary financials, cutting manual errors and saving time.
Unconsolidated Subsidiary
Sometimes, subsidiaries are unconsolidated if:
- Parent ownership is below 50%
- Parent chooses not to combine financials.
Even unconsolidated subsidiaries may still influence the parent company. Remire provides visibility even for these entities, ensuring informed decisions.
Comparing Subsidiaries with Other Entities
| Entity Type | Key Difference |
|---|---|
| Branch | Not legally separate; fully part of the parent |
| Sister Company | Owned by the same parent but separate entities |
| Affiliate | Often, a partnership with less parental control |
| Division | Internal part of the parent company, not independent |
| EOR (Employer of Record) | Quick international hiring without creating a legal entity; not ideal for long-term operations |
Tip: Choosing between a subsidiary and an EOR depends on your long-term goals, control needs, and market presence. Remire can help evaluate the best approach and manage multiple structures efficiently.
Pros, Cons, and Challenges of a Subsidiary
Advantages of A Subsidiary
- Limits the parent company’s liability
- Easier expansion into new markets
- Builds a distinct brand identity
- Simplifies compliance with local regulations
Disadvantages of A Subsidiary
- Higher setup and operational costs.
- Complex reporting and compliance
- The parent company may face reputational risks.
Challenges Faced by Subsidiary
- Managing multiple legal entities
- Coordinating financial reporting across borders
- Aligning subsidiary strategy with parent goals
Remire can streamline these challenges by providing centralized control, automated compliance, and real-time reporting.
Establishing and Managing a Subsidiary
You now know what is a subsidiary. Let’s discuss the steps of establishing it.
Steps to Establish a Subsidiary
- Decide the ownership structure.
- Register the company legally in the target market.
- Set up financial accounts and reporting systems
- Hire employees and management.
Regulatory and Accounting Implications
- Must comply with local laws and tax regulations.
- Parent consolidates financials for reporting.
- Legal documentation is required for ownership and control.
How AI and Digital Tools Are Transforming Subsidiary Management
Modern tools make managing subsidiaries easier and more accurate:
- Intelligent Compliance Monitoring: Automates adherence to local regulations
- Centralized Entity Management: Manage multiple subsidiaries from a single platform
- Workflow Automation: Streamlines approvals, payroll, and reporting
- AI-Enhanced Reporting: Provides insights into hierarchy, performance, and risks
- Risk & Data Integrity: Detects anomalies and ensures accurate reporting.
With Remire Employer of Record, businesses can manage multiple subsidiaries globally. It involves tracking HR, managing payroll, compliance, and financials from one platform. This lowers risk, saves time, and makes operations more efficient.
How to find the subsidiaries of a company?
You can find a company’s subsidiaries by checking: You can also search “[Company Name] subsidiaries list” on Google for quick results.| Source | What You’ll Find |
|---|---|
| Company Annual Reports | Full list of subsidiaries globally |
| Company Website (Investors Section) | Organizational structure and legal entities |
| Stock Exchange Filings (10-K, 20-F) | Detailed subsidiary disclosures |
| Business Databases (Bloomberg, Crunchbase) | Ownership and corporate structure |
| Wikipedia (Corporate Structure Pages) | Quick summaries and major subsidiaries |
You can also search “[Company Name] subsidiaries list” on Google for quick results.
FAQs About What is a Subsidiary
What is a subsidiary in accounting?
A company controlled by a parent, often consolidated in financial reporting.
What is a subsidiary in law?
A legally separate entity controlled by a parent company.
What is a subsidiary in banking?
A strategic partnership where one entity is partially controlled by another.
What is the purpose of a subsidiary company?
To expand a business, reduce risk, and manage operations or markets through a separate legal entity.
Can a subsidiary be liable for a parent company
Usually, no, because both are separate legal entities.
Can a subsidiary leave a parent company?
Usually, no, because both are separate legal entities.
Can a subsidiary sue a parent company?
Yes, because the law treats them as separate entities.
Conclusion: Make Smart Business Decisions with Subsidiaries
A subsidiary helps businesses expand, manage risk, and operate efficiently across markets. Understanding what is a subsidiary and the differences between subsidiaries, branches, and affiliates is good for strategic growth.
For managing subsidiaries, employees, finances, and compliance, Remire simplifies operations and ensures accuracy.
With Remire, businesses can oversee multiple subsidiaries globally. They can also automate reporting and concentrate on growth without worrying about compliance.
Manage Your Subsidiaries Globally with Remire
Simplify operations, compliance, and financial management for all your subsidiaries.
