# Set up a hierarchy of subsidiary companies

Source: https://developer.avalara.com/avatax-dm-combined-erp/common-setup/configure-your-account/erp-hierarchy/

# Set up a hierarchy of subsidiary companies

Does your platform support holding companies and subsidiary companies that share tax-collection information or file together? If so, make sure AvaTax reflects this relationship by designating child companies during company set up.

Company relationships within AvaTax are very flexible. Hierarchies in AvaTax allow you to integrate multiple companies even if they are running on different accounting, eCommerce, and ERP platforms. A child company can inherit the taxability profile of its parent company or it can be configured with its own unique taxability profile.

In AvaTax, every company is assigned a company code. Company codes are used by AvaTax when designating which company profile processes the transaction.

Careful setup and use of company codes is essential for proper functionality of AvaTax.

Before you beginWhen creating your company, you will be prompted to enter the information below. Because this will be used for testing purposes, it's acceptable to specify a generic/test information.

-   Legal company name
    -   The name your company uses on legal documents.
-   Taxpayer ID Number
    -   Also known as an Employer Identification Number (EIN). This number is created by the IRS. Call the [IRS Business and Specialty Tax Line](https://www.irs.gov/newsroom/irs-offers-new-toll-free-numbers-to-assist-taxpayers "IRS Business and Specialty Tax Line") if you don't know your ID or have other questions about your company's Taxpayer ID Number.
-   Business ID Number
    -   If you do business outside the U.S., you need a Business ID (BIN) number. This number is created by the governments in the countries where your business operates.
-   Your company's primary address
    -   The physical address for your company's headquarters or main location.

You can find most of these items in your company's tax returns and [tax registration](https://knowledge.avalara.com/bundle/dqa1657870670369_dqa1657870670369/page/Tax_registration.html "business registration") documents.

Steps

1.  In [AvaTax](https://sandbox.admin.avalara.com), go to **Settings > Manage Companies**.
2.  Select **Add a Company**, and then select **Get Started**.
3.  Enter your company information.
    -   If your primary business address is located outside the U.S., clear the My Company's Primary Business Location Is in the U.S. checkbox, select the country your business is located in, and enter the Business ID (BIN) for that country.
4.  Select **Organize This Company Under a Parent Company**.
5.  Start typing the parent company's name in **Parent Company** field, and select it when it appears.
6.  In most cases, the child company shares tax-collection information with the parent company. If your child company doesn't, clear **Use Tax Collection Settings of the Parent Company**.
7.  If your child company files returns with the parent company, clear **This is a Separate Reporting Entity**. Leaving it selected means you need to set up returns separately for this child company.
8.  Click **Next**.
9.  Enter your primary business address including the street address; city; state, territory or region, and ZIP or postal code. This should be a place where you're registered to collect tax.
10.  Click **Validate**.
     -   If your company is located outside the U.S., you may not see this option. If that's the case, click **Next** to skip this step.
11.  Compare the address you entered against the validated address.
12.  Select **Use Validated Address** to accept the changes or select **Keep Original Address** to use the address you entered. We recommend using the validated address for the most accurate tax calculations.
13.  Confirm the address on the map or change it as needed.
14.  Click **Next**. If you used the parent company's tax-collection settings, you're done. Click **Activate Company**. Otherwise, follow the instructions in [Tell us where you collect and pay tax](https://knowledge.avalara.com/bundle/dqa1657870670369_dqa1657870670369/page/Tell_us_where_you_collect_and_pay_tax.html "Tell us where you collect and pay tax") to set up tax calculation for your company.

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