How to set up a subsidiary company
Since a
subsidiary company operates like an independent, cut-down version of
the practice, a number of steps must be taken to set up and configure a new company before it can be used by
members.
1. Promotion
The first step in setting up a new subsidiary company is to either promote an existing
entity contact or create a new contact to represent the company. Ensure that the contact is well-described and contains up-to-date information before proceeding.
To assign the subsidiary company' marker to the contact you have selected, click the 'subsidiary companies' hyperlink on the
practice summary screen, and search for the contact you want to promote.
After promotion, a new company tab will appear at the top of the screen. Other users will have to restart ContactsLaw in order to access the new tab.
2. Activities
When members are working within the subsidiary company, they will be limited to the set of activities that are created-for or made-available-to that company. Therefore, you must first decide which activities will need to be available to the subsidiary company you are configuring.
Click the company button (which replaces the practice button) on the ribbon and navigate to the management tab. Under the activities view, you can:
- Make activities that were created under the practice (or another subsidiary company) available to the new company - use the 'add shared activity' button and browse to locate the activity you want to add.
- Create new activities that will be exclusive to this company - do this whenever business processes are dramatically different in the subsidiary company compared to the practice.
Notes:
- Any activities marked as being available to all companies will automatically appear under any new company you create. You cannot remove or hide these activities.
- You should always provide a telephone call activity, as it can interrupt members at any time.
- Permissions to activities are shared between companies. Create a new activity if the permissions for an activity you intend to share differ between companies.
- Don't forget to assign permissions for any new activities you create.
3. Document types
As with activities, document types can either be shared between companies or created independently. On the documents tab, click the 'add shared type' button to make an existing document type available to the subsidiary company.
Notes:
- You should ensure that a 'correspondence' document type exists in every subsidiary company.
4. Chart of accounts
Depending upon how you intend to use the subsidiary company, you will have to create a subset of the controlled accounts that will facilitiate the accounting activities you have made available.
As a bare minimum, you will require:
- Provision for GST
- GST liability
- Suspense
- Historical balancing
If you intend to perform billing within the subsidiary company, you will also need:
- Debtors
- Disbursements
- Professional fees
- Fixed charges
- Bad debts
- Interest on overdue bills
- Discounts on professional fees
- Disbursements written off
You may also wish to create the creditors controlled account, if delayed payment features are required.
You can create these essential accounts using the account wizard.
If you are migrating from another accounting system, you should also create the remainder of the items on the chart of accounts using the 'add account' button on the accounts view of the general tab.
5. Opening balances
At this point, you should use the opening balance journal to bring in the balances on each account, working from a current (or recent) set of financial records for the company.
Tips:
- Remember that liabilities, income and owner's equity figures are usually entered as credits, while asset and expense figures are entered as debits.
- Set the transaction date for the opening balance journal to correspond with the date to which the figures you are working from are accurate.
- You can save a draft and recommence the activity if you reach a point from which you cannot yet proceed.
6. End of financial year roll-over
If the figures you are entering as opening balances relate to a previous financial year, you should also post an end of financial year journal to zero the income and expense accounts (by transferring their balances into an appropriate equity account).
Tips:
- Set the date of the roll-over journal appropriately.
- ContactsLaw can automatically journal all income/expense balances to an owner's equity account of your choice. This requires considerably less effort than manually entering debits and credits.
Other issues to consider
The above steps represent the minimum required to get the new subsidiary company up and running. However, you should also consider the following:
Removing a subsidiary company
To remove a subsidiary company go to The Practice -> Summary -> Subsidiary companies. Right click on the Subsidiary company and click on Remove.