It's a typical problem companies face as they start to grow. In order to expand their business additional entities are needed. Companies face this issue at different times, but the accounting solutions available are the same regardless of your budget. When you reach month end and need to perform some intercompany eliminations or present consolidated financials... what do you do?
What are my options?
If you're running QuickBooks, then you're stuck using Excel. You likely have multiple instances of QuickBooks running in parallel, one for each entity. Then at the end of the month you'll be dumping out the relevant reports from each one into Excel. Next you'll need to aggregate the data between them and manually account for any intercompany elimination that may be required. Then, after you've had at least one other person double-check your work for errors, you'll be able to see your consolidated reporting… but only in excel.
If that sounds familiar, it’s not surprising. When you search for consolidation accounting software there's no shortage of results to pick from. Taking the time to pick the right one, get it customized for your organization, and documenting the consolidation process so your future accounting team can run with it is not a quick task.
Other accounting systems for small and medium sized businesses have similar issues. Xero has had an open feature request for multi-entity support for over 5 years now and a resolution isn’t in their pipeline. The official reply even recommends searching for add-on tools.
I don't want to use Excel!
What's the point of using accounting software, whether cloud or desktop, if you need to export the data every time your want to present a consolidated balance sheet & income statement? The only real answer is "Bigger accounting solutions are too expensive!". Unfortunately that is all too true. If you want to have truly consolidated reporting and intercompany eliminations, without reverting to spreadsheets, your software options are limited and expensive.
Cloud accounting ERPs like Intacct and Netsuite are generally seen as the next step up. But the price jump is substantial. They offer an array of extra features, but most are priced as an add-on, and some of the included ones you likely don't need at this point.
These issues are becoming increasingly more common as small and mid-market companies find it easier to operate multiple offices early on in a highly connected world. SoftLedger is consolidation accounting software that is built for multi-entity companies, with the flexibility to start small and scale as your company grows.