windows 2003 ad design. branch office.

i have 1 main office using win 2003 server, this is where all the main applications reside, i have a smaller branch office in NJ. 5 people that rdp into the main office to use applications.

i want to put a server in the branch office. how should i set it up?
1) install win 2003 and premote it to a DC?
2) should i make a subdomain like nj.company.com?

thanks.