When does it make sense to open a local subsidiary?

Opening a local subsidiary is expensive and demanding, yet some companies decide to do it after all — here are three most common reasons why.

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Opening a local subsidiary is not only expensive, but also causes a lot of extra work for your accounting team. We described all the detailes in our previous article. Sometimes though, despite the costs and workload, opening a local subsidiary might be the best option for your business. We’ve created a list containing three reasons when this big project can make sense.

1. The number of employees in a specific location 👩🏻‍💻👨🏽‍💻👩🏼‍💻

Though it makes little sense to go through the process of opening local subsidiaries if your team is distributed and every team member is in different country, five remote workers in the same location may be worth the trouble. The more employees you have from a given country, the more it’s justified to create a new infrastructure from the scratch.

2. Employee’s choice 📑

The other factor to take into the account is that remote candidates might not want to be self-employed. There are many reasons for this: perhaps they’ve never been self-employed before or they are more comfortable being an employee.
In that case, if you want to make a hire and candidates don’t want to work as contractors, the local entity is the only solution.

3. Local presence 📊

How much other business are you doing in that country? If a particular location has an essential value to your business because, for example, you direct your sales to that specific market, a local office may be vital for your sales results. In that scenario, a subsidiary would be a good investment.


Whatever your reasons to open the local subsidiary are, always remember to asses the risk and research possible costs and amount of paperwork.


If you’d like to discuss that issue further by speaking about the individual case, feel free to click Request a demo at the bottom of the page to schedule a call with Matt, one of the founders of Pilot.


⚖️ Legal Disclaimer: The information contained in this site is provided for informational purposes only, and should not be construed as legal advice on any subject matter.


Cover photo by Nathan Riley on Unsplash
Photo #1 by Frank Zimmermann on Unsplash

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