Sub-divisions to a company

[eitai2001]

Hi Guys.

What is the best way to go about this.
What I mean is say for example you have Closed Corp named X.

You now want to also trade as aX, bX, cX, dX, eX and fX

For example, X sells a huge variety of clothes, shoes, etc to the public.

But now you want aX to deal solely with selling to business.
bX to sell only shoes to the public
cX to sell only clothes to the public
etc, etc

One way I was thinking of is to create a pty ltd for each subdivision so that the CC owns the shares, however this is very costly as you need auditors for pty ltd's, etc.

Each subdivision may or may not have separate employees, but each sub division will definitely target a more specific market and will have a different business image to the main company and other divisions?

You could say something similar to the Media24 group i.e. Finance24, motors24, etc, etc.

Regards

Itai

[Dave A]

You could have seperate brands within the same single ownership.
You could have multiple companies with a holding company tying them together.

One thing I'll warn about now - managing multiple entities is quite a challenge. There are issues that crop up that you don't get in the single cell business entity.

If you are doing this only for marketing reasons, I'd go the multiple-brand-in-one-company route. If it is for other reasons... Perhaps best to explore that only if it is a bridge you are going to cross.

[eitai2001]

You could have seperate brands within the same single ownership.
You could have multiple companies with a holding company tying them together.

One thing I'll warn about now - managing multiple entities is quite a challenge. There are issues that crop up that you don't get in the single cell business entity.

If you are doing this only for marketing reasons, I'd go the multiple-brand-in-one-company route. If it is for other reasons... Perhaps best to explore that only if it is a bridge you are going to cross.

I guess you could say marketing reasons ... I want different sides to promote different products in their own individual way ... and I really don't want the burden of more companies.

[Yvonne]

There are accounting packages which make use of "Classes", as you enter the invoices, bills etc you enter the class.
When running reports you can then select a specific class and the program will calculate a Profit & Loss statement or Sales Report etc. for a selected class.
We do this to run "Seperate" books for each division of the company but within one accounting package.
Our auditors audit one set of books, and produce one set of financials.

If you might plan to sell one division of the company at a later stage this may not be the best solution for you.

This suggestion is probably too simple for what you need, as I would this you could only trade under one "name" with one Vat Registration Number etc.

Perhaps it is possible to register for Vat as one company name and then X Trading as ? - check with S.A.R.S.

Yvonne

[Chatmaster]

If you do not have risk to spread, stay away from multiple companies, I promise you it is hugely complicated to manage all of them. I currently have three CC's to manage and it is extremely time consuming to manage 3 bank accounts, 3 Debitors, 3 creditors, and books in general for all 3 the businesses. What makes it even more complicated is the fact that I have different members to each CC which means that I have to attend a lot of meetings and deal with many more issues.

From a marketing perspective brands are much more powerful than business entities. IMO focus on branding it is a much better call.

[eitai2001]

Ok ... so we deduced that creating a business is not the best option. So what would be the best way to go about creating the names ... how do I trade as "X"? I'm guessing I can't just write "Business A trading as X"? Do I have to submit the names to an entity, or create trademarks or something?

[Dave A]

You can do the (legal entity) t/a My Brand1, Brand2 etc. But to protect your brand names, it is a good idea to register trade marks.

Roelof, do you also find the problem of different entities trying to pull on the same resources at the same time? And then there is all this pressure on who has priority. That one drives me nuts.

[eitai2001]

You can do the (legal entity) t/a My Brand1, Brand2 etc. But to protect your brand names, it is a good idea to register trade marks.

Ok, lets say I wanted to sell frogs under Digital Addictions name and wanted a whole other website etc, and I want the website to be called Frog Addiction.

Do I now have to write in the T&C on the website "Digital Addiction T/A Frog Addiction"? I'm assuming the logo can just be Frog Addiction provided that at the bottom of each page it says Digital Addiction T/A Frog Addiction ... or do I say Frog Addiction is a division of Digital Addiction CC?

In terms of legal documents such as invoices, VAT number, etc ... I don't mind keeping everything as Digital Addiction CC. I think the financial cost of having to get separate invoices for each division, especially when there can be up to 20 is un-necessary, but perhaps I'm wrong.

I use an accounting system called Fincon, so if you have any insight on divisions in Fincon, please do share.

Regards

Itai

[Dave A]

In that instance I'd recommend

Frog Addiction is a division of Digital Addiction CC?

I've thought of one wrinkle in this.

Imagine some official returns where you give your company and trading names. It would go

XYZ cc t/a ABC, DEF, GHI etc.

Could get quite long and maybe even raise some eyebrows!

[eitai2001]

So then what can I do ... because I sort of need the various trading names.

[Yvonne]

I operate one company, but with three divisions, one name, one tax number etc.

Just operating the three divisions - accounting/Payroll/B.E.E./ and all the other returns required is more than sufficient nightmare!

Everything is administrated jointly, only figures are separated per division.

I have to wonder if the benefit you seek, is sufficient to warrant the major amount of administration required to achieve it.

Yvonne

[Dave A]

I share Yvonne's experience with this. There is extra work involved. You can stick with the plan - just expect questions every now and then together with a dose of frustration when it comes to filling in some forms.

You know why you are doing it and you can justify it.

As long as you aren't abusing it (such as using three of your divisions/brand names to bid on the same tender) no-one can really hold it against you.

[eitai2001]

Maybe there is a simpler way. What I want to do is have various websites all operating under the "Addiction" label, but with differnt for-words ... i.e.my frog addiction example. Hence why I am asking what is the best route. Basically, I know I have to trade under digital addiction, but on each of the websites, I want to distinguish the main reason for that website all within my related field. I.e. Computer Addiction for a website that just does computers ... even though the company name is Digital Addiction. How does Media 24 work, because they have many websites under their company, such as finance 24, news 24, etc.
Initially I will operate all the "Divisions" under one set of books, but if they get large on their own some time in the future, then I will hire employees to run the larger sections.

[Dave A]

An option:

You could send all your invoices from Digital Addiction. You can specify the website you are billing for as a line item. That takes care of all the red tape complexity.

From there, tracking and managing the relative performance of each website is similar to tracking the performance of different products.

If a website gets big enough to warrant setting up under its own company, Digital Addiction can sell the site to the new company you form for that purpose.

[eitai2001]

An option:

You could send all your invoices from Digital Addiction. You can specify the website you are billing for as a line item. That takes care of all the red tape complexity.

From there, tracking and managing the relative performance of each website is similar to tracking the performance of different products.

If a website gets big enough to warrant setting up under its own company, Digital Addiction can sell the site to the new company you form for that purpose.

That sounds like a good option, but what do you mean as a line item on the invoice? Because I need to put the products on the actual invoice.