Managing accounting software for multiple businesses can be challenging, especially as your operations grow.
In fact, a 2022 Bank of America survey found that 26% of small business owners have multiple businesses, with 58% owning two and 30% owning three. With different tax filings, financial reports, and compliance requirements, keeping everything organized is no easy feat.
This article explores how the right accounting tools, like QuickBooks, can help simplify multi-business accounting and keep your finances on track!
Multi-Entity vs. Multi-Unit Accounting: What’s the Difference?
When you’re running multiple businesses, the difference between multi-entity accounting and multi-unit accounting might seem small, but it can make a big impact on how you manage your finances—and on which accounting software for multiple businesses you should use.
Multi-Entity Accounting:
Multi-entity accounting is all about keeping completely separate businesses under one roof—but managing each one individually. If you own a marketing agency and a restaurant, for example, each business would have its own tax ID, bank accounts, and financial reports. These businesses are independent of one another, and so are their financials. One business’s success or failure doesn’t bleed into the other (except maybe emotionally).
The benefit? You get a crystal-clear picture of how each business is performing without muddying the waters. But this also means you’ll need software that’s up to the challenge of handling these separate entities. Tracking revenue, expenses, and taxes across completely different businesses is no small task, and it’s easy to mix things up if you don’t have the right system in place.
Multi-Unit Accounting:
Now, multi-unit accounting is a bit different. This applies to businesses with multiple locations, departments, or segments all operating under one business entity. Think of a retail chain, a franchise, or even a company with different regional offices. All these units share the same tax ID and financial records, but you still need to track how each individual location or department is doing.
For example, if you own three bakery locations, each store would be a “unit” under the same business. You’ll want to track sales, inventory, and costs for each shop to see which one is bringing in the dough (pun intended). But at the end of the day, all these numbers roll into one set of financials for the business as a whole.’
Related Reading: Why QuickBooks Projects is So Important For Tracking and Profitability
How QuickBooks Simplifies Accounting for Multiple Businesses
Managing multiple businesses from an accounting perspective is no small feat! Whether you’re dealing with multi-entity accounting (separate businesses with distinct financials) or multi-unit accounting (multiple locations or segments within one entity), managing multiple businesses from an accounting perspective brings unique challenges.
Fortunately, QuickBooks offers powerful solutions to tackle these challenges:
Centralized Financial Management: For those managing multiple entities, QuickBooks Enterprise allows you to handle all your businesses within one system. This simplifies the generation of consolidated reports while keeping each entity’s financials distinct, ensuring clarity and accuracy across the board.
Advanced Reporting: Both QuickBooks Online and QuickBooks Enterprise offer customizable reporting features. QuickBooks lets you track performance for each business or location, so whether you’re managing multiple units or entirely separate businesses, you’ll have detailed insights into performance at every level.
For example, QuickBooks Enterprise provides multi-unit reporting, allowing you to view how each department or location is performing while still consolidating data for the entire entity.
Data Consistency and Accuracy: One of the biggest risks of managing multiple businesses is the potential for errors or inconsistent data. QuickBooks ensures all financial data is recorded accurately, reducing the risk of mistakes in reporting or transactions. QuickBooks Enterprise, in particular, helps streamline data entry and standardize processes across entities, improving accuracy and saving time.
Compliance Made Easy: With built-in tax tracking and compliance features, QuickBooks helps ensure each business meets its specific tax obligations, without the headache of managing compliance for each entity manually.
Inter-company Transactions: Handling inter-company transactions can be complex and prone to errors if not managed properly. QuickBooks Enterprise simplifies this by reducing duplications and making it easier to track the movement of money or resources between entities.
Related Reading: Choosing the Right Version of QuickBooks for Multiple Companies
QuickBooks for Multi-Business Accounting: Which Version is Best?
When it comes to finding the right accounting software for multiple businesses, QuickBooks offers a few solid options—but the best choice depends on how complex your operations are and what your needs look like.
Related Reading: QuickBooks Online vs QuickBooks Enterprise: Going Beyond the Basics
QuickBooks Online for Multiple Businesses
Best for: Small businesses with simpler operations.
Separate subscriptions: QuickBooks Online can handle multiple businesses, but each entity requires its own subscription. You’ll need separate accounts, each with its own financial data, tax filings, and login credentials.
Ideal for independent records: If you’re running completely separate entities (e.g., a coffee shop and a consulting firm), this allows for clear, independent financial records for each business.
Pros:
- Easy to use
- Accessible platform for smaller businesses
- Ideal for separate, uncomplicated businesses
Cons:
- Requires multiple subscriptions (which can become costly)
- Managing separate accounts can be time-consuming as your businesses grow
QuickBooks Enterprise for Multiple Businesses
Best for: Businesses with more complex needs and multiple entities.
Multi-entity management: QuickBooks Enterprise allows you to manage multiple businesses under one system. You get centralized management, consolidated reporting, and customizable financials for each entity.
Ideal for complex operations: If you’re dealing with multiple entities, high transaction volumes, or inter-company transactions (e.g., retail chains or real estate portfolios), Enterprise simplifies everything by consolidating your accounting needs into one platform.
Pros:
- Centralized management of all businesses
- Advanced reporting features
- Scalable for growing businesses
- Supports multi-entity accounting
Cons:
- Higher cost
- More complex setup
What Do MISSION Accounting Experts Recommend?
At MISSION Accounting, we know that managing multiple businesses can get complicated fast—and choosing the right accounting software is just the first step, but an incredibly important one!
- If your businesses are smaller and independent, QuickBooks Online may work well—but remember that each business requires a separate subscription.
- For businesses with multiple entities and complex operations, QuickBooks Enterprise is a more robust, scalable solution that consolidates everything under one system.
Here’s the thing: getting the setup right is key. Ongoing accounting support can make all the difference as your businesses grow and change.
Our team of experts is here to help you choose the best solution and provide ongoing guidance, ensuring your accounting stays smooth and stress-free. Reach out today for a free consultation, and let us take the hassle out of multi-business accounting!