To have or not to have a branch? That is the question

The idea of expanding the business by investing in a new branch location appears to be the most suitable procedure. However some important points should be considered in order to make the right decision.

Advantages:

The  greatest advantage for the partners is to have the total control of the activities and profits made by the branch.  But on the other hand…

Disadvantages:

The branch is totally dependent on the Head-Office that will have to cover the costs to open the branch, such as facilities, equipment etc. And the taxation ends up to be the same of a new and independent company which becomes the best way to invest.

Here are some of the disadvantages:

1)      The subsidiaries are subjected to approval of the executive power and supervision of the public prosecutor;

2)      It is a requirement to publish annually, the balance sheet, the economic results and the administrative measures of the subsidiaries,  with the penalty of having the authorization taken away;

3)      Acts of branches can charge patrimonially the Head Office.

4)      At last, a branch registration procedure ends up being more bureaucratic than a Brazilian company with foreign partners.

As you can see, the opening of branches in Brazil is not simple and requires a big, detailed and specific planning. Other initiatives can be as effective as that and a lot less complicated.

Advertisements