What Is Legal Entity in Sap Fico

A company is used for consolidation functions in SAP, while the company code is an independent legal accounting unit for which we can prepare a complete set of financial statements. A corporation is a group of companies that may have one or more company codes, while the corporate code is a legal entity with in a group where do we prepare stand-alone financial statements such as balance sheet and profit and loss account? If a company has established a new branch in another country, it may have different taxes, currencies, and legal restrictions to meet all of these requirements. The company must record transactions separately so that this company can create and maintain a new company code. Company: This is the unit for which your financial statements are created and can be assigned to one or more company codes. A company is your legal business organization. The consolidated financial statements are based on the company`s annual financial statements. Clients are defined in the configuration and assigned to enterprise codes. Each company code must use the same COA (chart of accounts) and the same fiscal year. Also note that the local currency may be different for the business.

Tanya Duncan`s experience with global SAP financial implementations in Europe, Mexico and Singapore all has one thing in common: complex legal entity structures. Designing enterprise codes and assets in an SAP system is not always easy, and this article presents some considerations on how to effectively build these structures. Key Concept Maquiladora is a factory in Mexico. A company is the organizational unit of SAP FI for which you can prepare separate financial statements in accordance with the legal requirements of the country in which it is seized. They may designate legally dependent branches as companies and merge them into legal units by consolidation. We recommend using the standard company G00000 provided by SAP if you only need one company. It is very important to note that only branches in different countries are called company codes. Now that we have the details of the case study, let`s follow the steps below to define the required companies: BS was not happy with the associated diversification into the consumer goods sector and acquired East-West Transportation Services (EWTS; later renamed BSTS) in 1992 to capitalize on the booming transportation sector. BSTS manufactures elevators, escalators and various brands of diesel engines from the EWTS stable. If a company has different offices around the world (i.e. the company has different offices in different countries), each entity is called a company code instead of referring to it as a company.

On the overview screen that appears, click the New Entries button and keep the field values. All of these company-related values are stored in table T880. Let`s look at some of the important fields illustrated in the following figure: The business unit in SAP FI is an important business structure that you need to be aware of, as it makes it easier to record and find journal entries. This blog post gave you an overview of this structure and showed you how to define a structure in SAP FI. Therefore, if you change the number of decimal places of a currency used at different time periods, the system converts all amounts to the new decimal places and the integrity of the data is lost. To change the number of decimal places for a currency that is already in use, you must convert all tables in the system that contain currency fields. However, never attempt to change the decimals of a currency or delete an existing currency in a production system, as you may risk the amounts (already recorded in the documents) becoming incorrect or invalid. Branches in the same country belong to only 1 company code. Specific terminology is used in SAP FICO solutions to define general ledger entries. One of these terms is enterprise, an SAP-FI business structure that everyone who works with SAP should be familiar with. Let`s take a look at this structure and see how to define it in SAP FI. This is your complete guide to setting up financial accounting in SAP ERP! Brush up on legacy accounts payable (accounts payable, accounts receivable, SAP general ledger, and asset accounting), then dive into contract and payables accounts, consolidation, lease accounting, travel management, SAP Fiori, and more.

You`ll learn how to set up your business structure, use maintenance tools, and make sure your implementation works for your unique business. When you`re done, save the details. The BSCP company (BS1000) has now been established, as shown in the final figure. There is not much difference between the corporate code and the corporate code until the corporation has branches. For example: a company pays its subsidiary; Several company codes are involved in business-to-business transactions. In a business-to-business transaction, the system displays a separate document with its own document number in each of the business codes. Individual documents are linked to each other by a common inter-company code number. The system automatically generates line items (receivables and debts that arise between company codes) to settle debits and credits in each document. For this article, we use the following case study on the Mercury Project team. BellSmith (BS), a leading company headquartered in the United States, manufactures and sells consumer goods and transportation systems. The consumer goods business for BS is managed by a company called BS Consumer Products (BSCP), based in Sacramento, California.

Starting with the manufacture and distribution of sanitary ware and sanitary accessories in 1960, BSCP diversified into consumer appliances (in the 1980s) and consumer lighting systems (in the 1990s). The Mercury project team decided to represent the previous structure in the SAP system, as shown in the first figure. The two companies, BSCP and BSTS (both in the US), are called BS1000 and BS2000, respectively. Corporate codes: This is the smallest unit in your organizational structure and is used for internal and external reporting purposes. Enterprise codes are not optional in SAP (applications and system products) and must be defined. Financial transactions are displayed at the company code level. Corporate codes can be created for any business organization, whether national or international. It is recommended that after you define an enterprise code in the configuration with all the necessary settings, other company codes created later are copied from the existing company code. You can then make changes if necessary. This reduces repeated entry of information that does not change from one company code to another and eliminates the possibility of missing data entry.

Repeat the steps to create the other BSTS company (BS2000) and click Save. Organized directly under the customer, a company contains one or more company codes. If a company consists of more than one company code, all company codes must be assigned with the same operational chart of accounts and fiscal year variant (FYV), although they may have different local currencies for day-to-day transactions. The creation of enterprise codes in SAP is mandatory and at least one enterprise code must be defined in the FI implementation system. Example: Reliance (company) has 2 company codesReliance Gasoline (company code) Reliance Gas (company code). Click on the table for more details and click on the functional area to display all tables specific to this module/sub-module. First, use the OX15 transaction or go to the SAP Customizing Implementation Guide> Define the structure > definition of the business structure > the financial accounting > company. For example, suppose you set the currency GBP (British Pound) to two decimal places. Now, if you publish an amount of 100 GBP, this amount will actually be stored as 10000 GBP in the currency field of the database. Only during transaction processing does the system (using the GBP currency key) interpret the value as GBP 100.00.