When an organization expands or strategizes growth, whether for profit or non-profit, it typically opens up new locations. Banks, coffee shops, supermarkets, department stores, restaurants, beauty salons, airlines and even government offices that operate in more than one location, domestic or international, to meet their customers’ or clientele’s needs. Visit Accountants Near Me.
Such additional locations can be either an entity or a branch structure.
Branch or Office?
The organization can adopt the form of either a division or an entity, depending on its objectives. All are members of a single organization and they are not a separate legal body from the other when carrying out operations away from their home office.
The main difference between the two lies in their degree of independence or autonomy. For example, a sales agency does not usually store inventory, but instead shows merchandise, takes orders and arranges the merchandise for delivery. In other words, the corporation operates solely on behalf of the home office (H.O.), with the latter managing all organizational issues such as product procurement, advertising, and credit awarding.
Nevertheless, the branch has a greater degree of autonomy and thus acts more independently of the home office than the department, particularly in the following respects:
Provision of a broader variety of consumer or clientele facilities
Exercising better decision taking in management
Control of other business elements, such as inventory processing, order fulfillment, credit and collection
Maintaining a different accounts structure
Separate accounting scheme for the company
The division usually has its own independent accounting structure representing this greater degree of control, while the department does not. In addition, it is the home office that documents all transactions of the agency under the accounting framework of the company.
This maintenance by the branch and home office of separate accounting records enables more accurate monitoring of operations and helps top management to better evaluate branch results and make strategic business decisions for the organization.
Branch Services Reporting
The Branch ‘s reported financial transactions are typically of the following types:
Registered contracts or contracts as a legal entity with third parties ( e.g. clients, vendors, creditors, service companies);
Within the Branch
For other Business divisions
A Office at Home
The branch’s documentation of its external transactions and those that by definition concern only the branch (i.e. internal transactions within the branch) is conducted using daily accounts and log entries. Nevertheless, such intra-company accounts would have to be established and used to document the branch ‘s transactions with the H.O. Similarly, branch inter-branch transactions or branch transactions with another branch are typically conducted or authorized via the H.O. Using intra-enterprise accounts.