By now you already know that using a cloud-based accounting software is a true blessing when it comes to managing your business. Quick and easy invoicing, estimating and expense management, clever projecting, countless add-ons, fully automated reporting are just some of the things an online accounting solution can do – for one business. But what if you own multiple entities and you want to manage all of them from the same account? This is where things get a bit complicated but, thankfully, not unsolvable.
You just have to learn the dos and don’ts of managing multiple businesses from the same account if your accounting software provides this option. But, as some of the following cases will show, you don’t have to panic if you are obliged to use multiple accounts, since these clever programs can still connect your businesses via their integrations.
Managing Multiple Companies
Having multiple businesses under the same account is anything but impossible thanks to cloud-based accounting solutions. In fact, if you are engaging in similar business activities but have the same clientele and vendors, the accounting software allows you to share the so-called master files. Aside from the shared data, one of the biggest advantages of having your businesses under the same account is the almost seamless interoperability. This means that you can perform actions which have effects on your other businesses, but the software still prepares individual business reports for each company to avoid any confusion, like accidentally entering an expense in a different currency. Another important aspect is that it is only you, the account manager, who will have access to all businesses, thus preventing others from accidentally or deliberately tampering with the data of your other companies.
However, keep in mind that almost all accounting companies treat your businesses separately: in other words, regardless of the same account, if you have multiple companies, you have to multiply the subscription fee with the number of entities.
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Things to Look for
Like we said before, it is not impossible to manage multiple businesses through the same account. However, there are certain things you have to pay attention to, otherwise you might end up creating a mess.
Support for multiple currencies is crucial, especially if you run businesses in different countries. Simply entering an invoice amount in the wrong currency already impacts the books of your different businesses. Therefore it’s important you pick a solution that makes it easy to enter and manage different currencies.
Thankfully the accounting software knows that it deals with different companies under the same account, therefore it keeps business reports separate from each other. However, it is best to ask the help of an accountant to go through your books, in order to spot deviations and to comply with the different regulations of the countries and states you conduct business in.
This is a real catch 22: keeping different bank accounts for each of your businesses is logical, but maintaining them costs a lot. However, if you have one bank account you might end up mixing them up, because you will not be able to differentiate between bank transactions. Some accounting software will let you tag bank transactions or group them, so that you can create an overview of the transactions related to one business entity or branch specifically.
Each state and each country applies their own tax rates – and you have to keep them separated from each other. Applying the wrong tax rate once can result in faulty tax reports, which is one of the riskiest parts of managing multiple entities through the same bookkeeping account.
Recommended Online Accounting Software
Although finding an online accounting solution with the option of multi-business accounting is not easy, it is not impossible – and we have three examples worthy of your consideration.
Although we cannot praise Xero enough for being one of the best and most versatile accounting solutions on the market, we have some grave news: unless you don’t mind that your books are merged together, Xero highly discourages its users from creating one account for multiple companies. In fact, Xero emphasizes its single-entity nature, thus you have no choice but to create multiple accounts for each of your company. However, that doesn’t mean that this top rated cloud accounting company is an option to scratch off your shortlist. There are a couple of tricks you can perform to make accounting with multiple accounts for different companies with Xero manageable. Such a trick is Xero to Xero: once turned on, the moment you create an invoice in your primary Xero account it appears as a draft in any other Xero account you own. Another way is to use a third-party reporting tool, such as Spotlight Reporting or Fathom, with which you can consolidate your financial and non-financial data.
If you want an accounting solution that allows you to have multiple businesses under the same account, then FreshBooks should be your number one pick. While this software “only” knows the basics, it also sports some quirks like advanced projecting, time tracking and multi-business support, along with support for various third party services and solutions. You don’t have to be afraid of mixing data either, since the only thing that will be shared between your companies is your email ID and the login page. Furthermore, not only you can create as many additional businesses as you want, but you can also enjoy a 30-day free trial on each of them, starting from the day the subaccount for the new business is created.
Keep in mind, however, that you have to multiply the costs by the number of companies you own. Furthermore, if you want to see all FreshBooks business reports in one place, you have to rely on an add-on.
Although you have to choose the better pricing plan out of the two and you have to pay $19.99 for the first 6 months, Sage One has the same offer as FreshBooks: managing multiple businesses from the same account. With your subscription you get all features of Sage One, including automated bank reconciliation (with the option to split transactions between various ledgers), 1099s and detailed business reports for each of your businesses. Next to real-time cashflow forecasts and payment confirmations for your vendors, you can create so-called pro-forma invoices that don’t appear in the reports until they are paid. Just remember that in order to use multiple companies under the same account, you must pay as many times the price of the subscription fee as many businesses you own.