- Management control of the subsidiary companies and accounting consolidation, taking into account the difference in the start and ending date of the financial/tax year in each country and the regulations and laws applicable to the parent company and the subsidiary.
When establishing a business in Spain, it is important for UK companies to have control over the management of their subsidiary company in Spain. This is crucial to ensure that the business operations are aligned with the parent company’s objectives and strategies. The management control will involve monitoring and directing the performance of the subsidiary, ensuring that resources are used efficiently and effectively, and making strategic decisions to drive growth and profitability.
Consolidation of annual accounts is also important because it allows the parent company to have a holistic view of the financial performance and position of the subsidiary. In Spain, the fiscal year typically starts on January 1st and ends on December 31st, which may be different from the UK’s fiscal year. Consolidation involves combining the financial statements of the parent company and subsidiary, adjusting for any differences in accounting standards, and presenting them as a single entity. This provides a clear picture of the overall financial health of the business and helps in making informed decisions.
Having effective management control and consolidated financial statements can also help UK companies comply with local laws and regulations in Spain. It can demonstrate transparency and accountability, which can enhance the reputation of the business and build trust with stakeholders. Overall, these practices can contribute to the long-term success of the business in Spain.
An annual audit, is strongly recommended, for effective control, correct consolidation of accounts and complete transparency for shareholders/investors.