As your business grows, you may want to expand your business and get closer to where your valuable customers or potential clients are. The impact can be significant, not only does it help the company in cutting down the travel expense, being reachable to your clients and providing fast response gives additional value to the clients or customers.
There are two ways to be ‘physically closer’ to your clients, this can either be done by
Adding registered office locations
Opening a branch office
The differences between two are as follows:
Adding registered office locations:
With this option, no grand changes happen in the company. The only thing that changes is instead of having one business location, the company registers the new location as the company business address. The company can hire more employees and assign them in different locations. Although the office locations are different, the salary calculations of the employees will follow the regulation and be based on the min. wage of where your tax office is registered. You may also assign a team leader or manager on each office location to report to the director but the director is still responsible for running the business operations of the company in different locations.
Opening a branch office
With this option, there will be some changes in the company structures and require additional procedures to follow. The branch office will perform independently to expand its market reach in the area and eventually increase the revenue of the company as a whole. The branch office is directly responsible to report to the head office. The branch office offers the same or similar services as the head office providing ease to the customers.
According to the BKPM regulation number 6/ 2018, below are the requirements to set-up a branch office:
Head Office details:
Company name
Tax ID number (NPWP)
NIB
Company address
2. Branch Office details:
Company Branch deed and appointment of the Branch Head
Branch Head details (KTP and NPWP)
Branch office address
Therefore, it is also important to understand that you need to:
Appoint the head branch and process a branch deed with a notary
Process a branch tax ID (NPWP Cabang)
Register the new address in the system
The branch office has its own document and it is considered as a separate body of the head office. Therefore, the branch office follows the regulations where the office is domiciled, such as the minimum salary in the region, and reports tax separately. However, a branch office does not require a licence process because it is a unit or part of its head office that can be domiciled in a different administrative location as stated in Article 30 paragraph (7) of BKPM Regulation 4/2021.
With the above brief explanation, which do you think suits your business plan? If you are unsure, you can contact our consultants and we will advise you accordingly.
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Email: contact@lglbee.com
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