Can you use QuickBooks for multiple entities? While it's technically possible, you're likely to experience a lot of frustration as your organization grows to include many different locations or takes on additional companies. That's because while QuickBooks offers an easy-to-use interface, its accounting software was never made for multi-entity accounting.
Can you use QuickBooks for multiple entities?
QuickBooks is a popular small business accounting software, but many users find they outgrow it quickly, especially if they're on the desktop version. QuickBooks Desktop can crash if too much data is added to it. It was not designed to handle the automated accounting requirements needed to manage multi-entity accounting, without making the user jump through multiple hoops just to complete routine work. It also lacks the flexibility and scalability of cloud-based accounting solutions. You need to install it on each individual desktop, making it difficult to share information between multiple users as your company grows.
The need to work remotely during the pandemic accelerated the need for accounting software employees can access anywhere, leading more organizations to move toward solutions like QuickBooks Online.
How much does it cost to have multiple companies in QuickBooks Online?
QuickBooks Online does allow users to have multiple companies within the same account, but each will still require its own paid subscription. For a company with eight entities, that can cost upwards of $800 per month.
How do you switch between companies in QuickBooks Online?
Another drawback is that with QuickBooks Online, users cannot post entries between multiple business entities. The process requires creating each entry separately and is cumbersome and time-consuming.
That waste of time and energy can quickly become a problem for accountants who are already challenged to keep up with the day-to-day operations of multiple entities. It can also be a hindrance to company leaders who need their accountants' attention to be focused on business strategy, not the constant wrangling of inefficient acounting software. In some cases, companies need to hire additional employees just to keep up.
Disadvantages to using QuickBooks for multiple entities
The 360 Destination Group experienced many disadvantages while using QuickBooks Desktop (QBD) for multi-entity accounting. The organization needed to maintain separate accounts for each of its five companies, making inter-company transactions difficult and time-consuming.
Additionally, they had to perform a lot of manual, redundant data entry because of a lack of integration between QuickBooks and Microsoft Dynamics 365 CRM. This made financial reporting complicated, so it was difficult to evaluate the company’s performance or gain real-time insights between CRM data and back-office accounting processes.
Other organizations using QuickBooks for multi entity accounting have encountered similar challenges, including:
QuickBooks' multi entity distributions aren't automatic
When your entities pay bills on each other's behalf, or otherwise share transactions and inter-company loans, you must regularly log in to the various companies to update and balance those ledgers. Entering one bill that is distributed to five companies now becomes five separate transactions, each in its own separate database.
Comparing companies is complicated
Because QuickBooks can't report across multiple company databases within one file, many users turn to Excel so they can quickly see what's going on with each one. The downside? That can require a lot of tedious exporting, printing, and copying and pasting. The spreadsheets must be manipulated into easier-to-share PDFs. All that manual work can create a greater margin of error and make accountants dread their month-end administrative work.
There's a lack of real-time insight
QuickBooks does offer dashboards, but they lack the real-time detailed metrics you need for daily oversight of your multiple entities. Trying to understand your cash balance across all your companies can be a tedious process. What you really need is the ability to create personalized real-time dashboards that can display the right data to the right people within your organization.
No consolidated financial reporting
If you combine data from reports pulled at different times, you're not looking at the most up-to-date picture. Data integrity becomes a problem. The biggest problem we hear is that by the time an accountant gets reports done in Excel, the data is five days old. And the CEO can't make a good decision because he doesn't know where anything stands.
Big world, different currencies
QuickBooks can support different currencies in each company, but it is almost impossible to consolidate multiple companies each with a different home currency. You must manually convert each company to a common reporting currency.
There is no shared chart of accounts
QuickBooks creates a separate chart of accounts for each company, which means users can spend unnecessary hours having to add a new account to each company. Keeping them in sync can be a nightmare. A shared chart of accounts should be a no-brainer for multi-entity accounting. You should be able to share information on vendors, customers, and inventory across multiple businesses.
Compliance is convoluted
Without an accounting software system that's specifically designed to create and track inter-entity transactions, you sacrifice the ease of built-in safeguards that keep entries in line with accounting regulations and audit requirements. For instance, it's easy to miss journal entries across multiple companies.
An audit trail is an important part of maintaining compliance and preventing internal theft.
QuickBooks allows users to change transactions at any time but lacks a strong audit trail showing who made the changes and why.
How can your business benefit from multi-entity accounting software?
Multi-entity accounting software makes it easy to store financial information for all companies within your organization in a single database. When you update information once, the data synchronizes across all relevant entities.
This simplifies many tasks, including paying vendor invoices for multiple companies from a single screen and allocating expenses.
It also simplified bank book reconciliation, making it easy to reconcile hundreds of transactions at once instead of having to make many individual entries.
Managing consolidated financial reporting in multi-entity accounting software is also much easier. Instead of needing days to export and combine financial data, you can create personalized dashboards for your organization and export data into relevant financial reports in minutes.
Need to compare sales data for each location in one chart or see a breakdown of department costs? It's easy to do in just a few steps.
Multi-entity accounting software also makes real-time business intelligence possible, allowing you to develop strategic business goals and identify new opportunities. You can give your CEO a high-level overview of performance or create reports relevant to individual stakeholders who may only have investments in a few of your many entities.
Accounting in multiple currencies is also much easier with the right solution. You can automatically update exchange rates and complete transactions in one currency but report in another. Your company's subsidiaries can operate in their respective currencies while you create consolidated reports in your company’s primary entity. You can also add new entities, users or functionality as your company grows.
The best alternative to QuickBooks accounting software for multiple businesses
If your organization has outgrown QuickBooks, you have plenty of options. The cloud accounting software market is growing fast, expected to reach $20.4 billion by 2026, according to Fortune Business Insights.
Review site G2 lists over 520 accounting software solutions, including more than 50 for medium-sized businesses.
Some of these solutions will sound familiar, including FreshBooks, Xero, Zoho, and Sage 50cloud accounting. While the initial pricing of these entry-level accounting solutions may be appealing, it's important to choose a system that is designed for multi-entity accounting and has the features and functionality to grow with your organization. Look for a solution that is cloud-based, secure, integrates easily with the technology you already use, and simplifies financial reporting across multiple businesses.
Does Freshbooks offer accounting for multiple businesses?
While FreshBooks is easy to use and inexpensive (the most basic option might as well be free software), it lacks the features growing organizations need, including the ability to manage intercompany transactions and report on multiple locations without duplicate data entry. It's basically bookkeeping software.
Is Xero a good alternative to QuickBooks?
While Xero is a leading accounting software for small businesses, offering expense tracking, accounts payable and accounts receivable, it doesn't work well for companies who need to manage multiple businesses. It lacks a segmented chart of accounts, advanced financial reporting and the ability to manage expense tracking between different entities. You also cannot maintain a full audit trail within Xero or grant different levels of access for different people.
Is Zoho good for multi-entity accounting?
Zoho has all the basic functionality for small business owners, including the ability to send invoices, manage purchase orders, and use time tracking and inventory management. It gets high marks in user reviews for being affordable and easy to use.
However, even its most expensive plan does not offer a multi-entity experience. That means it's not a viable alternative to QuickBooks unless your business isn't planning to grow.
Should we consider Sage 50cloud accounting software?
Unlike enterprise-level solutions within the Sage family, Sage 50cloud wasn’t originally designed to support growing businesses with multiple companies. Although newer versions of Sage 50cloud have multi-entity accounting capabilities, they are limited. On the surface, Sage 50 may seem like a bargain, but the list prices don't take into account all of the costs of choosing Sage 50 as your enterprise's accounting software. There's also the cost of installing and implementing the software, and the cost of third-party integrations to handle tasks like invoicing financial reporting, payment processing and time tracking can add up.
G2 users have also noted Sage 50 is overly complex, and there are fewer integrations with third-party software compared to QuickBooks. The integrations also add to the cost.
Why Gravity Software is the best QuickBooks alternative
Gravity Software was built specifically to accommodate fast-growing businesses with multiple entities. As a cloud-based accounting software solution built on the Microsoft Power Platform, it has all the security features you'd expect from Microsoft with built-in integrations to many of the applications you already use in the Office 365 suite. With a single login, you can manage accounting for many locations. You can share information on vendors, customers, and bills while keeping other information separate. You can see an overview of the performance of your entire company or drill down to compare data points across individual entities. You can also use built-in business intelligence to identify growth opportunities.
Here's a closer look at the features that make Gravity ideal for businesses with multiple companies.
The ability to share information across multiple businesses
With Gravity, you can easily share data and files for customers or vendors, enabling quick data entry and effortless access control.
Managing accounts payable for multiple companies
With Gravity’s accounts payable solution, paying a vendor invoice on behalf of multiple companies takes just a few minutes. You can choose how you want to allocate each bill across entities from a single screen. The expense is automatically listed in each company's database, and Due To/Due From records are automatically balanced. Gravity also makes it easy to pay invoices in batches, set up electronic payments, and integrate with services like bill.com.
Easier bank book reconciliation
Gravity’s automatic bank book reconciliation makes it easy to set up automatic downloads of your transactions with multiple banks and credit card companies. You can automatically match check transactions featuring the same check number and amount and reconcile hundreds of transactions at once, significantly reducing the amount of time it takes to reconcile individual entries.
Prepare consolidated financial statements
It shouldn’t take your team days to compile financial data from every entity into a single financial report. With Gravity, you can create personalized dashboards for your organization and export data into relevant financial reports in minutes.
For instance, you can compare sales data for each location in one chart or create a pie chart showing the breakdown of department costs for the entire organization.
Business intelligence to make better decisions
Real-time business intelligence gives your company a competitive edge, allowing you to develop strategic business goals and identify new opportunities. Gravity uses Microsoft PowerBI for built-in business intelligence, making it easy to create personalized dashboards and charts with the data specific people within your organization need to see. You can give your CEO a high-level overview of performance or create reports relevant to individual stakeholders who may only have investments in a few of your many entities.
Accounting automation and AI
With Gravity, you can automate anything from revenue recognition to bank reconciliation to sending emails to approve certain expenses. You can also take advantage of advanced features, such as AI-powered invoice processing.
This frees up your team’s time to focus on more strategic priorities like planning, budgeting and risk mitigation.
Multi-currency accounting software
Gravity's multi-currency capabilities make it ideal for a global organization. You can update exchange rates and complete transactions in one currency but report in another. Your company's subsidiaries can operate in their respective currencies while you create consolidated reports in your company’s primary entity. You can also add new entities, users or functionality as your company grows.
See why Gravity is the best alternative to QuickBooks for multi-entity accounting. Schedule an online demo today.
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