Sec. 2(14) of Companies Act, 2013 ―branch office‖, in relation to a company, means any establishment described as such by the company
Dependent Branch: A branch which is dependent upon Head Office mainly for “Goods and Cash”. Books of accounts relating to such branch also will be maintained by Head Office.
Features of Dependent Branch:
- Branch receives goods from Head Office. Only those goods supplied by Head office will be dealt (sold) by branch. However, in case of need/emergency, the branch may be allowed to make local purchase after getting consent from Head Office. For those purchases, payments may be directly made by Head office or funds transferred to branch.
- Goods may be supplied to Head office at Cost price / Invoice price
- Branch normally makes cash sales. In some cases, branch is allowed to make credit sales also to regular/approved customers (with the consent of Head office).
- Cash sales and collection from debtors are periodically remitted to Head office.
- Branch accounts will be maintained by Head Office. However Branch maintains memorandum books like petty cash, debtors etc.
- Branch expenses like salary, rent etc. are paid/met by Head office. For this purpose there can be two alternatives.
- Head office separately sends cash to branch for meeting expenses
- Branch while remitting cash to head office, deducts some portion (towards expenses) and balance will be remitted.