While QuickBooks Desktop has supported the ability to 'host' more than a single entity (company file), only QuickBooks Enterprise has offered any sort of actual multi-entity accounting until Intuit recently released Intuit Enterprise Suite.
Multi-entity accounting integrates all your organization's financial data into a single set of financial records so that combined financial statements may be produced. While each entity within a multi-entity organization may maintain its financial records, in some instances, a centralized accounting department is responsible for managing the financial records of each entity as part of the organization as a whole.
Regardless of the method used to track each entity's financial data, multi-entity accounting aims to produce a consolidate set of financial statements that reflect the organization as a whole. Another aspect of multi-entity accounting is the ability to handle intercompany transactions properly, permitting shared resources to be allocated to each entity based on a respective value or percentage of the organization's operating income, expense, or capital value.
QuickBooks Enterprise Desktop began offering a rudimentary form of intercompany transactions a few years ago. While this method worked for some sorts of transactions, it was cumbersome and time-consuming. In other words it was 'clunky' at best.
Another feature of QuickBooks Enterprise related to multi-entity accounting was the ability to 'combine' QuickBooks file reporting data for different companies and produce various financial statements within Excel. Once again, the process was cumbersome and typically required substantial work within Excel to produce accurate and meaningful 'consolidated' financials for the organization as a whole.
In contrast, Intuit Enterprise Suite strives to overcome the limitations of QuickBooks Desktop Enterprise concerning both intercompany transactions and consolidated financial reporting. This newest Intuit solution affords multi-entity accounting at it's core, even if some 'bells and whistles' have yet to be rolled-out. Let us not forget that it took multiple (annual) versions of QuickBooks Desktop Enterprise to get the multi-entity features we currently have.
Multi-entity Support
Intuit Enterprise Suite provides multi-entity accounting, allowing users to manage multiple-entity organizations with subordinate entities. Intuit used much the same 'entity' access for multi-entity support as they had used in QuickBooks Online Accountant that enabled QBO Accountant users to access each of their 'connected' clients.
Source: Intuit Enterprise Suite
Accountants supporting Intuit Enterprise Suite clients will find a similar listing of the parent and subordinate entities on a new multi-entity tab within QuickBooks Online Accountant once they have accepted their 'my accountant' invitation from their client(s).
How to: Set-up Multi-entites in Intuit Enterprise Suite
To set up multi-entities in Intuit Enterprise Suite,
- Log into your Intuit Enterprise Suite account and navigate to the main dashboard.
- From the drop-down menu on the dashboard, choose the primary company that will act as the "parent" entity.'
- Add additional entities as "child" companies under the "parent" company.
Switch between entities within the same interface to manage multiple businesses under one login.
Intercompany Transactions
As mentioned earlier, one critical aspect of multi-entity accounting involves intercompany transactions. The ability to handle transactions between an organization's various entities is essential, yet the task can become daunting without the proper tools. I already mentioned how 'clunky' QuickBooks Enterprise Desktop is at this task.
Intuit Enterprise Suite can conveniently and accurately record journal entries that reflect accurate amounts assigned to each entity's books. In the future, Intuit Enterprise Suite will support other types of intercompany transactions such as Vendor Bills, Checks, Customer Payments, and Deposits.
Source: Intuit Enterprise Suite
I find this Intuit Enterprise Suite intercompany transaction methodology far superior to the 'clunky' back-n-forth, send, accept, further categorize, and update process found in QuickBooks Enterprise Desktop.
How to: Intercompany Transactions
To create intercompany transactions in Intuit Enterprise Suite:
- Log into your Intuit Enterprise Suite account and navigate to the main dashboard.
- Select the entity originating the transaction
- Navigate to Transactions, and select Journal Entry
- Toggle the Intercompany transaction to the true position (as shown in the graphic above)
- On the first line of the journal entry, the company column should default to the originating entity
- Select the account, any memo and the appropriate amount
- On the second line, the company column should also have defaulted
- Select the offsetting account, the memo should have defaulted, adjust the amount for any offsets
- On the third line, select the appropriate entity and amount
- On the fourth line, select the appropriate entity, offsetting account and amount for offset
- Continue selecting offsetting entities, accounts and amounts as appropriate to distribute the total.
- Be certain to save the transaction.
Multi-entity User Roles and Permissions
As part of managing a multi-entity organization, multi-entity accounting systems must provide a mechanism to control access and utilization for each user who will have access to one or multiple entities and the related accounting functions. Intuit Enterprise Suite provides utilization permissions for each user on an entity-by-entity and role-by-role basis.
Source: Intuit Enterprise Suite
How to: Manage Intercompany User Roles
Assign distinct roles to users for each company within your suite:
- Log into your Intuit Enterprise Suite account and navigate to the main dashboard.
- Go to Company settings
- Select User Management - find the option to manage users and their roles.
- Choose Entity Access - select which entity(entities) the user should have access to.
- Assign role(s) - select the appropriate role for each user.
- Custom permissions, as needed - modify each user's permissions based on their responsibilities per entity.
Source: Intuit Enterprise Suite
Consolidated Multi-entity Reporting
But the real 'meat-and-potatoes' of Intuit Enterprise Suite is the ability to produce multi-entity consolidated reports. Multi-entity organizations must have the ability to produce consolidated financial reports. Intuit Enterprise Suite can combine data from all the subordinate entities of an organization in a streamlined process that precludes error-prone attempts at consolidating multiple financial records within spreadsheets or other manual methods. This consolidation can be performed even when different currencies, accounting methods, and reporting needs are associated with each entity.
Source: Intuit Enterprise Suite
How to: Consolidate Multi-entity Reports
Automatically generate consolidated financial statements - balance sheet, income statement, cash flow statement:
- Log into your Intuit Enterprise Suite account and navigate to the main dashboard.
- Navigate to Reports within the reporting section of Intuit Enterprise Suite.
- Select Consolidated Report from the reporting options available.
- Choose the entities you want included in your consolidated report from the entities available.
- Run Consolidation - Intuit Enterprise Suite will generate a balance sheet, income statement and cash flow statement, taking into account any intercompany eliminations.
- Customize the consolidated financial reports by filtering dates, adding additional details, etc.
Intuit Enterprise Suite does the consolidation work automatically eliminating the need to export and manually merge date in spreadsheets. It automatically removes duplicate transactions between entities to ensure accurate consolidated reports.
While the use of Chart-of-account templates within Intuit Enterprise Suite helps ensure all of the entities within the organization use standardized accounting nomenclature aiding in the preparation of consolidated reports, account mapping permits dissimilar nomenclature to be recognized within the appropriate account structure during the consolidation process.
Manual eliminations allow users to adjust elimination amounts to remove the impact of intercompany transactions in one entity. This allows you to consolidate financials without having to add entries to individual books. These entries are used only for consolidation without posting to the individual entity fiscal records.
Source: Intuit Enterprise Suite
Murph's summary
I firmly believe we can expect to see additional multi-entity functionalities within Intuit Enterprise Suite as more organizations turn to this solution for their accounting needs. The input such organizations provide concerning their requirements will be invaluable to the continuing enhancement of these multi-entity capabilities.
If you want to learn more about Intuit Enterprise Suite, and discuss its multi-entity features as a possible option for one of your clients, reach out to one of Intuit's IES specialists.
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