Business software glossary
Multi-company accounting
Multi-company accounting means keeping the books of several businesses, such as a family's proprietorship, partnership firm and private limited company, separately but from one login. Each business keeps its own ledgers, GST returns and reports.
Why it matters to your business
Many Indian business families run more than one entity: a proprietorship for trading, a partnership for manufacturing, a company for a new venture. Keeping each in a different system, or different files on different computers, makes it hard to know where things stand and easy to post an entry in the wrong books. One login with clearly separate organisations keeps the law’s separation while saving you the trouble of switching tools.
How it works
Take a family that owns:
- Sharma Traders, a proprietorship registered for GST in Maharashtra.
- Sharma Industries Private Limited, a company with factories in Maharashtra and Gujarat.
This needs two organisations, because there are two PANs. Sharma Industries adds two GST registrations, one per state, and a branch with its own warehouse and invoice series in each. Sales from the Gujarat factory are billed on the Gujarat GSTIN, and each GSTIN files its own returns, while the company’s profit and loss account and balance sheet cover both.
When Sharma Traders buys ₹5,00,000 of goods from Sharma Industries, the company issues a tax invoice and the proprietorship records a purchase bill, exactly as with an outside vendor.
Common mistakes
- One set of books for two entities. Mixing two PANs in one set of books makes GST returns, income-tax and audit much harder to get right.
- Branch set up as a new company. A new state registration of the same business does not need separate books; it needs an additional GSTIN and branch.
- Inter-company balances that do not match. What one company shows as receivable from the other should equal what the other shows as payable. Reconcile them every quarter.
- Shared staff logins. Give each person their own login and a role in each organisation they work in, so every entry can be traced to who made it.
Questions about Multi-company accounting
Should I set up a separate company or a branch?
A separate legal entity with its own PAN, such as a new private limited company, needs its own set of books. A new state registration or office of the same business, under the same PAN, is a branch or an additional GSTIN within the same books.
Is a transfer between two of my companies a sale?
Yes. Two companies are separate persons, so goods moving between them need a tax invoice with GST. Even within one business, a transfer between GSTINs in different states is treated as a supply.
Can I see combined figures for all my companies?
Each company's books and returns are separate by law. Combined figures for a group are prepared by your accountant from each company's statements, removing sales, purchases and balances between the group companies.
Can my CA access all my companies with one login?
Yes, if each organisation invites your CA. They then choose the organisation after signing in and see only what their role allows in each.
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