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2 business units, 1 company. Separate or not? - surfol - 06-29-2011

Say you have 2 business units under 1 company (a small business).
And they have different but related products (say one is in furniture business while the other is in PU Foam/spring bed)and different management and employees.
Their customers could be different, but some could be customers of both units. They have different marketing strategies and different allocations for marketing budgets also.

Should you create a separate business management software/system/ for each unit or combine them in one system? Separate or not, this company will file tax return for both units under 1 company.

What do established companies usually do under this situation?

- sohail kashif - 06-30-2011


A company could have as many businesses as mentioned by it memorandum of Association's object clause. These both could be treated as two segments of a company and their results could be reported separately under IFRS 8.

It depends upon the management intention they could form a separate company for each segment and a company for both segments. But later option could makes the reporting and software implementation difficult.

So I think it is better to have separate company for each segment if they have reasonable size to do this.