Adding a company to a production database is probably not a good idea.  Production should be kept separate, and not all data is company specific, so it is possible to get changes that cross companies.  Perhaps a better idea would be to backup the production database and restore it to a separate new database.  You may have to license it as a test database, and run the DB Sync utility prior to being able to use it as a test database.

We sometimes do this on those rare occasions where a customer will send us their database for tracking down issues that seem to be specific to their database.  The restored database will have all the data of the original so that side-by-side comparisons can be made and you get to use data that you are familiar with.

Perhaps a partner or experienced user can describe their best practices for creating a test environment.

You can create a new company and use the Assisted Company Setup task.  This has a Copy feature that can be used to copy some of the setups like Payment Terms and Customers from an existing companies to a new one.  It won't do a full company copy but might save you some time if there are similarities between the source and target company.   

Thanks - that probably sounds like the way to go. My IT manager is saying that it could take 50 hours of setup time to create a new company which seems crazy especially since the new company is a duplicate of an existing company. I've worked with other systems that have very close to copy-and-paste functionality to create new companies. Very surprised Sage Mas500 wouldn't have something similar.