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Guide

Multi-entity accounting: every company keeps its own books, and the group still has to add up.

Owners add entities for good reasons: a property LLC, a second location, a new product line, a foreign parent or subsidiary. Each one is a separate set of books, and the money moving between them has to be tracked on both sides. Here is how to keep it under control.

Book a free 30-minute call The basics

The basics

One Entity, One Set of Books

Each legal entity needs its own general ledger, bank accounts and tax filings. Mixing two companies in one file is the most common multi-entity mistake, and the hardest to untangle later.

  • Separate bank accounts for each entity, with no shared cards.
  • A separate QuickBooks Online or Xero file for each entity, or separate entities inside Intuit Enterprise Suite.
  • The same chart of accounts structure across entities, so reports can be compared and combined.
  • A short written list of which entity pays for what.

Between entities

Intercompany Transactions

When one entity pays a cost for another, lends it money or charges it a fee, both sets of books must record it, on the same date and for the same amount.

  • Use dedicated intercompany accounts. “Due from Company B” in Company A, and “Due to Company A” in Company B.
  • Record both sides together. Whoever records one side records the other in the same sitting.
  • Reconcile monthly. The two balances should be equal and opposite at every month-end. If they are not, find out why before closing.
  • Settle regularly. Large balances that sit for years raise questions from lenders and tax advisers.

How intercompany charges are priced and documented can have tax consequences, especially across states or countries. That is a question for your CPA. The bookkeeping job is to record what was agreed, consistently, on both sides.

Shared costs

Allocating Shared Costs

Rent, software, insurance and staff are often shared. Pick an allocation method that is simple and defensible, such as headcount, revenue or floor space, write it down, and apply it the same way every month. Changing the method often makes the numbers impossible to compare.

The group view

Consolidation and Eliminations

Consolidated reports show the group as if it were one company. To get there, intercompany balances and transactions are removed, so the group does not count money it paid to itself.

  1. Close each entity’s month and reconcile intercompany balances.
  2. Combine the trial balances using a common account structure.
  3. Eliminate intercompany receivables and payables, and intercompany revenue and expense.
  4. Review the consolidated balance sheet and profit and loss.

If intercompany balances do not agree, the eliminations will not clear, and the consolidated numbers will be wrong. That is why monthly intercompany reconciliation matters more than the consolidation tool you use.

The software

What QuickBooks and Xero Can Do

Multi-entity approach
QuickBooks OnlineOne file per entity. Consolidation is done outside the file, with a reporting app or a spreadsheet.
Intuit Enterprise SuiteBuilt for several entities, with multi-entity reporting and shared setup across companies.
XeroOne organization per entity. Consolidation usually uses a reporting add-on or a spreadsheet.

For a deeper look, see multi-entity bookkeeping in Xero and QuickBooks Online vs Intuit Enterprise Suite.

Where we fit

How We Handle Groups

We keep the books for groups of companies in QuickBooks Online, Intuit Enterprise Suite and Xero. Each entity is closed on the same schedule, intercompany balances are reconciled every month, and consolidated reports are prepared when you need them. We work alongside your CPA on structure and tax.

Book a free 30-minute call Bookkeeping packages

Questions

Common Questions

Does each subsidiary need its own books?
Yes. Each legal entity needs its own general ledger, bank accounts and tax filings. Use a separate QuickBooks Online or Xero file per entity, or separate entities inside Intuit Enterprise Suite.
How do you record intercompany transactions?
Record both sides at the same time, using dedicated due-to and due-from accounts in each entity. At month-end the two balances should be equal and opposite.
What are intercompany eliminations?
Adjustments made when preparing consolidated reports that remove balances and transactions between entities in the same group, so the group does not count money it paid to itself.
Can QuickBooks Online consolidate multiple companies?
Not within one file. Each QuickBooks Online company is separate, and consolidation is done with a reporting app or spreadsheet. Intuit Enterprise Suite includes multi-entity reporting.
Can Xero consolidate multiple companies?
Each Xero organization is separate. Groups usually consolidate with a reporting add-on or a spreadsheet after each organization is closed.
Xero Gold Partner Earned through certified advisors and a proven client base.
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Xero Asia Partner of the Year Recognised by Xero for delivery, not for sales volume.
13+ years in practice Across accounting outsourcing, ERP and accounting software work.

Next

Where to Go Next

Xero guide Multi-Entity Bookkeeping in Xero Groups, tracking and consolidation in Xero. QuickBooks guide QuickBooks Online vs Intuit Enterprise Suite When the group needs more than one file. Insight Outgrown Your Accounting System? The signs, and the options. Service Intuit Enterprise Suite Multi-entity books in one system. Who we serve Growing & Multi-Entity Businesses Bookkeeping for groups of companies. Guide Month-End Close Checklist The close steps, in order.

Running more than one company?

Tell us how many entities you have and which software each one uses. We will tell you what a monthly close for the group would look like.

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