A corporate office is a central workplace for a corporation. It is commonly referred to as the head office of a corporation or a large company.
A head office and a headquarters is also a similar term that we commonly associate with the epicenter of large companies.
Let us discuss what is a corporate office, a head office, a headquarters, and what are the key differences between them.
Corporate Office Vs Head Office – Definitions
A corporate office is the main place of business for a corporation. Although the term is widely used for incorporated and unincorporated companies alike, it is derived from the word “corporation”.
A head office is also the central place of command for a private or public company. It is the place from where a company controls, directs and monitors its business activities.
By definition, both corporate office and head office represent the same place.
In practice, the word head office is linked with small and medium enterprises while the corporate office terminology is more common for large corporations and listed companies.
A company can put in place more than one head office. These Head offices can be categorized as regional or business unit head offices.
Contrarily, small or large companies will have only one corporate office usually. However, there are no legal restrictions for any company from having more than one head office or corporate office.
What is a Corporate Headquarters?
A corporate headquarters is the epicenter of power for corporation or a company. It is the principal place of work for a company where the executive suite (directors) of the company work.
The term headquarters (HQ) is commonly used in the US and the American region for listed companies. In the UK and EU, the common terminology is the corporate head office (HO) for listed and non-listed companies.
Large companies can further divide their headquarters into several subdivisions or units. For instance, a company can set up different units for finance, marketing, HR, logistics, and so on depending on the needs.
Executive meetings, policy decisions, strategic planning, corporate governance, and compliance activities take place in corporate headquarters (head offices). This is the place where all executives including the CEO, CFO, and the Chair of the Board will work.
Why the Location of a Corporate Office is Important?
The corporate office, head office, or the headquarters of a company is more than just the meeting place of the BOD members.
Foremost, the headquarters of large companies become a symbol of stature and attraction for the business community at large.
The Silicon Valley is the hub of headquarters of the world’s leading tech giants including Amazon, Facebook, Apple, and Google is a prime example of becoming a prestigious business center.
Corporate offices or HQs of large and successful enterprises attract other businesses. They can help an economy run smoothly by attracting more investment into that location.
For several reasons, large corporations that work in the same industry would place their corporate head offices in the same geographical locations.
A prime reason for choosing the right place for a corporate head office is the tax incentive. Many states and local jurisdictions are willing to offer tax exemptions to large entities for setting up their central offices within their jurisdictions.
Corporate headquarters bring more jobs, investment, and development to the region. They can offer jobs to skilled and non-skilled employees.
It means choosing the right place is important and beneficial for corporations as well as governments around the world.
Apart from tax incentives and appeals from local governments, corporations look for several objectives when choosing a suitable location for their corporate head offices.
A real-world example of shifting to a more suitable corporate headquarters is of the General Electric (GE) company. GE moved its years old HQ from Connecticut to Boston.
The prime objective behind the move for GE was easy access to young and skilled labor and aspiring communities of students.
Similarly, for tax incentives and other opportunities, Tesla and Oracle moved their headquarters to Texas recently.
Geographical V.s Virtual Corporate Offices
In recent years, companies have started working through virtual head offices. Although mainstream companies are yet to join the trend.
Small and medium enterprises can afford to work through virtual headquarters. However, it only suits companies in the IT or tech industry with limited physical infrastructure requirements.
Even if large corporations set up virtual head offices, they’d still need a geographical presence for various reasons.
Place of Incorporation Vs. Corporate Headquarters
The place of incorporation is the registered office address of a company where is it listed or incorporated.
Incorporation refers to the registration or legal setup of a company. This process requires completing legal documentation and other requirements as per law.
Many companies can incorporate their legal head offices in one place and relocate to another place for a physical presence.
The prime factor behind this strategy is to take advantage of a relaxed tax environment in the place of incorporation.
It means a company may accumulate its revenue in its place of incorporation to take advantage of a low tax regime and continue controlling its operations from another.
Principal Place of Business Vs. Head Office v Corporate Office
By definition, the principal place of business is the place from where a business controls, monitors, and oversees its operations. In simple words, it is the principal or center of an organization.
Therefore, we can see that the principal place of business, a head office, and a corporate office (or HQ) are the same places with different terminologies.
In practice, the terminology of the principal place of business is less common as compared to a corporate head office or a corporate headquarters.
As mentioned above, companies can have two different HQs or principal places of business. Sometimes, companies may face litigation and legal actions in one place that may be different from their physical head office.
Corporate Head Office Vs. Regional Office
Large companies can set up different regional offices to facilitate their operations. They often need to set up a physical presence in different locations for compliance and legislative requirements as well.
For instance, Google and its parent company Alphabet have several regional offices in the US, EU, and the Asia Pacific regions. Its global headquarters is in Mountain View California.
Although it is common to see only one corporate head office or HQ, companies can have more than one HQ as well.
A real-world example of companies having two HQs is Amazon which now has two corporate headquarters.
Head Office of Private Companies
While we commonly use the term corporate head office (or HQ) for large companies, a head office can also mean the central workplace for private companies.
Small businesses and entrepreneurs can use the same place to run and manage their companies.
It is a common practice for small business owners, freelancers, and entrepreneurs to use their home spaces for office work as well.
Although we assume a headquarters to be a gigantic workplace, a small workplace like a portion of a house can also be termed as a “head office” of the company.