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Legal Entities

A legal entity, which the ERP screens call a company, is a legal company operating inside your application. Every ledger, document, stock movement and record number belongs to one. A single company in one country means one entity you set up once; a group with subsidiaries is what entities exist for.

Where to find it

Architect Panel → ERP - Setup:

  • ERP Setup — the Companies tab, with pickers and validation
  • Legal Entities — the underlying datastore, for inspection

Admin Panel → ERP - Setup:

  • ERP Setup — the Companies tab for ERP administrators who are not architects

Entity is not tenant

A tenant is a customer of the platform, sealed from every other tenant. An entity is a legal company that one customer operates, and entities are designed to be crossed: an intercompany recharge writes both sides in one transaction and a consolidation reads every subsidiary at once. Tenant isolation forbids both by construction, which is why entity is a separate dimension.

Adding a company

  1. Open ERP Setup and choose the Companies tab, then Add a company (or Add your first company on a new install).
  2. Enter the Code (short and unique, up to 32 letters, digits, hyphens or underscores, for example UKLTD) and the Legal name.
  3. Choose the Parent company, or None - top of the group for the holding company or a single company.
  4. Choose the Country, and the two currencies: Books kept in (the functional currency) and Reports to the group in (the reporting currency).
  5. Set Financial year ends on (day and month; the year starts the next day). Accounting periods and financial-year reports follow it.
  6. Choose the Accounting book (usually Local statutory), the Consolidation method and Owned by parent (%).
  7. Optionally choose a Business calendar (used for due dates and service levels) and enter the Tax registration number.
  8. Leave Active on, and press Save company.

What the settings do

  • Books kept in: every journal line stores its amount in this currency as well as the transaction currency.
  • Reports to the group in: the currency a consolidation translates this company into.
  • Accounting book: the company's primary book. Bank reconciliation, the close checks and the VAT return read this book. The books on offer are listed under Accounting Books in ERP - Reference Data (Local statutory, IFRS, US GAAP, Tax, Management).
  • Consolidation: Full consolidation, Proportional consolidation or Equity method, applied with Owned by parent (%) when the group is consolidated.
  • Elimination company: marks a company that holds intercompany eliminations only. The consolidated trial balance offers to post its elimination journal there, and company pickers list elimination companies last.
  • Active: switch it off to retire a company without deleting its history.

What goes wrong

  • "Use a three-letter ISO currency code" or "Use a two-letter ISO country code": pick from the list rather than typing.
  • The Book column shows None on the Companies table: the company has no accounting book and postings will fail. Edit it and choose one.
  • "You can only change companies you have write access to": a non-architect ERP administrator edits only companies their group can write to. When such an administrator creates a company, their own administrator groups are given Post access to it automatically, so it does not vanish from their screens.
  • "A company you cannot see" in the Parent column: the parent is a company you have no access to. It is kept as it is when you save.

Worked example

A holding company with two trading subsidiaries adds three companies, then a fourth. HOLD is the top of the group in GBP. UKTRADE has HOLD as parent, keeps its books in GBP and is 100% owned. NLTRADE has HOLD as parent, keeps its books in EUR, reports to the group in GBP and is 80% owned under Full consolidation. Finally HOLD-ELIM, with HOLD as parent and Elimination company ticked, holds the intercompany eliminations. All four have a year end of 31 December and the Local statutory book.

Recommendations

  • Set both currencies at creation. Nothing stops a later change, but postings already made keep the amounts they were posted with.
  • Create a planned company now, marked inactive, if there is any prospect of it. Splitting one company into two after a year of postings is not practical.
  • Name companies as they appear on their statutory accounts, not by trading name.
  • Grant access next. A company nobody has access to is invisible to everyone except architects; see Company Access in ERP Roles & Workspace.