Corporation divisions

Divisions of a corporation are not legal entities. So this is not really a legal question and there is no paperwork from a legal perspective. Instead, divisions are accounting concepts. An accountant can advise you on how to set up your books and records to separate business activities within your company so that they can be operated as independent divisions.

Jim

You've asked what steps need to be taken in order to create a "division" of your existing company that would do something completely different from what the company does now. You've already received an answer on this subject, but I thought I would put in my 2 cents as well.

While you could start your new enterprise from within your existing corporation without any further action, I don't recommend doing it that way for several reasons:

1) Your current business relationships (landlord, insurance agent, accountant, etc.) are geared to the kind of business you are in now. If you broaden that field you ought to at least consult these professionals to see if you need more insurance, a permit from the city, etc.

2) From a customer standpoint you are more than likely going to cause confusion that could work against your new enterprise - even if it is just confusion with your existing business; not to mention if the name is already being used by another computer company.

3) Beware the danger of comingling funds and accounts. Without going into a long, drawn-out explanation, the idea here is to keep different revenue streams, assets, and liabilities, distinct in order to protect yourself. If not, the liability of the food business could wipe out the computer business, or vice verse.

This is just a partial list of considerations to keep in mind, but I hope it helps. Feel free to contact us if we can be of any further assistance.