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Define company

In this step you can create companies.Acompany is an organizational unit in Accounting which representsabusiness organizationaccording to the requirements of commercial law in a particular country.

You store basic data for each company in company definition. You only specify particular functions when

you customize in Financial Accounting. Company G0000 is preset in all foreign key tables.

In the SAP system, consolidation functions in financial accounting are based on companies. A company cancomprise one or more company codes.

When you create a company you should bear in mind the following points relating to group accounting:

If your organization uses several clients, the companies which only appear as group-internalbusiness partners, and are not operational in each system, must be maintained in each client. Thisis a precondition for the account assignment of a group-internal trading partner.

Companies must be cataloged in a list of company IDs which is consistent across the group. Theparent company usually provides this list of company IDs.

It is also acceptable to designate legally dependent branches 'companies' and join them togetheras a legal unit by consolidation.

Recommendation

SAP recommends that you keep the preset company ID G00000 if you only require one company. In thisway you reduce the number of tables which you need to adjust.

Activities

Create your companies.

Further notes

All company codes for a company must work with the same operationalchart of accounts and fiscal year.The currencies used can be different.

NOTE:-

Definition: company

Financial Accounting (FI)

The smallest organizational unit for which individual financial statements can be drawn up according to therelevant commercial law.

A company can consist of one or more company codes.

All company codes within a company must use the same transaction chart of accounts and the same fiscalyear breakdown. The company code currencies can be different.

A company has one local currency in which its transaction figures are recorded.

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Application Components (SAP-R/3)

The organization that has purchased and is implementing SAP software.

Security (BC-SEC)

Attribute in a user's profile. Every user belongs to one company only.

You can use companies to implement a simple form of delegated user administration.

Definition: business organization

Consolidation (FI-LC)

An economic system (or unit) that has as its purpose the extraction, production, or distribution of goods orservices.

Its internal structures can vary greatly, depending on the requirements placed by accounting, logistics, andhuman resource management.

Outwardly, a business organization can take the form of a single legal entity (a company) or as a group ofseveral legal entities (corporate group).

Definition: client

SAP Business One (SBO)

A customer or person who relies on another person for assistance or service.

Application Components (SAP)

In commercial, organizational, and technical terms, a self-contained unit in an SAP system with separatemaster records and its own set of tables.

Definition: chart of accounts


A classification scheme consisting of a group of general ledger (G/L) accounts.

A chart of accounts provides a framework for the recording of values to ensure an orderly rendering ofaccounting data. The G/L accounts it contains are used by one or more company codes.

For each G/L account, the chart of accounts contains the account number, the account name, and technicalinformation.

A chart of accounts must be assigned to each company code. This chart of accounts is the operative chartof accounts and is used in both financial accounting and cost accounting. Other charts of accounts include:

Country-specific charts of accounts -

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These are structured in accordance with legal requirements of the country in question

Group chart of accounts -

This is structured in accordance with requirements pertaining to Consolidation.

SAP Business One (SBO)

The index of all general ledger accounts used by one or more companies.

Definition: fiscal year


A period of usually 12 months, for which the company produces financial statements and takes inventory.

A fiscal year need not correspond to the calendar year.

Under certain circumstances, fiscal years containing fewer than 12 months are also permitted (short fiscalyear).

Define Credit Control Area

In this step, you define your credit control areas. The credit control areais an organizational unit thatspecifies and checks a credit limit for customers.

Note

A credit control area can include one or more company codes. It is not possible to assign a company codeto more than one control control area. Within a credit control area, the credit limits must be specified in the

same currency.

Standard settings

The credit control area 0001 is defined in the SAP standard system.

Activities

Define your credit control areas.

NOTE:-

Definition: credit control area


An organizational unit that represents an area responsible for granting and monitoring credit.

This organizational unit is either a single company code or, if credit control is performed across severalcompany codes, multiple company codes. Credit information can be made available per customer within acredit control area.

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Definition: company code


The smallest organizational unit of Financial Accounting for which a complete self-contained set of accountscan be drawn up for purposes of external reporting.

This includes recording of all relevant transactions and generating all supporting documents required forfinancial statements.


The smallest organizational unit for which a complete self-contained set of accounts can be drawn up forpurposes of external reporting.

The process of external reporting involves recording all relevant transactions and generating all supportingdocuments for financial statements such as balance sheets and profit and loss statements.

Classification

Business object

Edit, Copy, Delete, Check Company Code

In this activity you create your company codes. The company code is an organizational unit used inaccounting. It is used to structure thebusiness organizationfrom a financial accounting perspective.

We recommend that you copy a company code from an existing company code. This has the advantage thatyou also copy the existing company code-specific parameters. If necessary, you can then change certaindata in the relevant application. This is much less time-consuming than creating a new company code. See"Recommendations" for more details about copying a company code.

If you do not wish to copy an existing company code, you can create a new company code and make all thesettings yourself. You define your company codes by specifying the following information:

Company code key

You can select a four-character alpha-numeric key as the company code key. This key identifiesthe company code and must be entered when posting business transactions or creating companycode-specific master data, for example.

Company code name

Address data

The address data is necessary for correspondence and is printed on reports, such as the advancereturn for tax on sales/purchases.

Country currency

Your accounts must be managed in the national currency. This currency is also known as the localcurrency or the company code currency. Amounts that are posted in foreign currency are translatedinto local currency.

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Country key

The country key specifies which country is to be seen as the home country; all other countries areinterpreted as "abroad". This is significant for business and payment transactions because differentforms are used for foreign payment transactions. This setting also enables you to use differentaddress formatting for foreign correspondence.

Language key

The system uses the language key to determine text automatically in the language of the relevantcountry. This is necessary when creating checks, for example.

You do not specify the functional characteristic of the company code until configuring the relevantapplication.

You can set up several company codes perclientto manage the accounts of independent organizationssimultaneously. At least one company code must be set up in each client.

To take full advantage of SAP system integration, you must link company codes to the organizational unitsof other applications. If, for example, you specify a CO account assignment (for example,cost centerorinternal order) when entering a document in FI, then the system must determine acontrolling area totransfer this data to CO. You must specify how the system is to determine the appropriate controlling area.

The system derives the controlling area from the company code if you assign it directly to a company code.You can also assign several company codes to one controlling area.

Standard settings

Company code 0001 has already been created in clients 000 and 001 for the country DE (Germany). Allcountry-specific information ("parameters") is preset in this company code, such as the payment methods,tax calculation procedures, and chart of accounts typical for this country.

If you want to create a company code for the USA and its legal requirements, you must first of all run the

country installation program in client 001. The country of company code 0001 is then set to "US" and allcountry-specific parameters related to it are set to the USA. For more information, see theSet Up Clientsactivity under "Basic Functions" in the Customizing menu.

Recommendation

You should keep the preset company code number 0001 if you only require one company code. This keepsto a minimum the number of tables you need to set up.

You can copy a company code using a special Customizing function. Company code-specific specificationsare copied to your new company code. The target company code must not yet be defined, it is definedautomatically during the copying procedure.

SAP recommends the following procedure when creating company codes:

1. Create the company code using the function "Copy Company Code".2. Enter special company code data with the function "Edit Company Code Data".

You can also use the function "Edit Company Code Data" to create a company code. However, in thisinstance, the company code "global data" is not copied. If you create a company code using the "Copy"function, most of the "global data" is also copied.

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Further notes

You should create a company code according to tax law, commercial law, and other financial accountingcriteria. As a rule, a company code in the SAP system represents a legally independent company. The

company code can also represent a legally dependent operating unit based abroad if there are externalreporting requirements for this operating unit, which can also be in the relevant local currency.

For segment reporting according to Anglo-American accounting practices, you need to represent the regionsin which the company has significant dealings. This reporting data can be generated entirely on the basis ofcompany codes.

For processing company codes, there are extended functions that you can access with the function call"administer" or "Copy, delete, check company code". The entry in the company code table is processed inthese functions as well as all dependent Customizing and system tables in which the plant is a key.

For more information on the extended functions, seeCopy/Delete/Check/Process Project IMG.

In addition to these functions, there is also the "Replace" function. You use this function if you want tochange a company code key. This is only possible if no postings have been made in the company code thatis to be replaced. You should therefore only use this function for newly-created company codes.

Activities

1. Create your company codes based on the reference (company code 0001) delivered with thestandard system. SAP recommends using the function "Copy Company Code" to create yourcompany codes.2. Go to the activity "Edit Company Code Data" and change the name, description, address, andcurrency. Maintain the company code data that has not been copied.3. Use the project IMG view to postprocess data that is changed automatically. You can also carryout postprocessing at a later stage since the system keeps the generated project view.

NOTE:-

Definition: company code


The smallest organizational unit of Financial Accounting for which a complete self-contained set of accountscan be drawn up for purposes of external reporting.

This includes recording of all relevant transactions and generating all supporting documents required forfinancial statements.


The smallest organizational unit for which a complete self-contained set of accounts can be drawn up forpurposes of external reporting.

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The process of external reporting involves recording all relevant transactions and generating all supportingdocuments for financial statements such as balance sheets and profit and loss statements.






Definition: cost center

Controlling (CO)

An organizational unit within a controlling area that represents a defined location of cost incurrence.

The definition can be based on:

Functional requirements

Allocation criteria

Physical location

Responsibility for costs

IS Retail (IS-R)

Part of a company seen as a separate area of responsibility, location or cost-accounting entity. Place atwhich costs occur.

Definition: internal order

Controlling (CO)

An instrument used to monitor costs and, in some instances, the revenues of an organization.

Internal orders can be used for the following purposes:

Monitoring the costs of short-term jobs

Monitoring the costs and revenues of a specific service

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Ongoing cost control

Internal orders are divided into the following categories:

Overhead orders - For short-term monitoring of the indirect costs arising from jobs. They can alsobe used for continuous monitoring of subareas of indirect costs. Overhead orders can collect plan

and actual costs independently of organizational cost center structures and business processes,enabling continous cost control in the enterprise.

Investment orders - Monitor investment costs that can be capitalized and settled to fixed assets.

Accrual orders - Monitor period-based accrual between expenses posted in Financial Accountingand accrual costs in Controlling.

Orders with revenues - Monitor the costs and revenues arising from activities for partners outsidethe organization, or from activities not belonging to the core business of the organization.

Definition: controlling area

Controlling (CO)

An organizational unit within a company, used to represent a closed system for cost accounting purposes.

A controlling area may include single or multiple company codes that may use different currencies. Thesecompany codes must use the same operative chart of accounts.

All internal allocations refer exclusively to objects in the same controlling area.

More information: Extended functions for working on organizational units

Copy

Delete

Check

Create and work on Project IMG view

Copy

This function is for creating a new organizational unit using the settings for an existing OrgUnit as yourtemplate.

If you have already made system settings for the new OrgUnit you can still use copy functions. Only themissing settings will be copied. Settings you have already made are not affected.

When you use the copy functions a Project IMG view is generated that contains all the objects that arecopied into the new OrgUnit so you can work on them.

Delete

This function is for deleting an existing OrgUnit and all its settings.

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Check

This function is for checking all the settings for an existing OrgUnit.

There are two stages

First all the tables that have the OrgUnit in their table key are checked to ensure the entry ispresent.

Then the dependent tables that are tested against the table key are also checked to ensure thespecified entry is present.

Project IMG

This function is for generating a new Customizing project view. The view generated contains all the IMGactivities needed for work on the OrgUnit as part of the project. There must already be a Customizing projectfor this to work.

Further notes

Only system settings are copied or deleted. Master data is not affected.

To delete an OrgUnit:

1. Carry out reorganization for the data that is dependent on the OrgUnit.2. Delete the OrgUnit.

Recommendation

If you want to limit your system settings work to the mandatory activities, you must create your new OrgUnitusing the copy functions. This ensures the required system settings are generated.

Mandatory activities are the IMG activities that you have to configure because meaningful standard settingscannot be suplied. You are expected to create all OrgUnits with the copy function, because otherwise allsystem settings that have an Orgnit in their keys would have to be mandatory activities.

Define Business Area

Use

In this section you create business areas. A business area is an organizational unit within accounting thatrepresents a separate area of operations or responsibilities in abusiness organization.

When defining a business area, you enter a four-character alphanumeric key and the name of the businessarea.

In aclient, you can set up several business areas to which the system can assign the postings made in allcompany codes defined in this client. To ensure consistency in document entry, you should give businessareas the same name in all company codes.

You make all other specifications for your business areas in the Financial Accounting Implementation Guide.

Activities

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If necessary, create business areas.

Further notes

For more information about business areas, see the SAP Library underFinancial Accounting -> GeneralLedger Accounting -> Business Area.

NOTE:-

Definition: business area

ASAP (Accelerated SAP) (SV-ASA)

A unit in an enterprise that groups product and market combinations as homogeneously as possible for thepurpose of developing unified business policy.


An organizational unit of financial accounting that represents a separate area of operations orresponsibilities within an organization and to which value changes recorded in Financial Accounting can beallocated.

You can create financial statements for business areas, and you can use these statements for variousinternal reporting purposes.






Define Functional Area

In this activity you create yourfunctional areas.

Example

Typical functional areas are Sales, Production, Marketing, Administration and Research & Development.

Activities

Create the functional areas you require.

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NOTE:-

Definition: functional area


An organizational unit in Accounting that classifies the expenses of an organization by functions such as:

Administration

Sales and distribution

Marketing

Production

Research and development

Classification takes place to meet the needs of cost-of-sales accounting.

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Assign business area to consolidation business area

In this step you allocate thebusiness areas toconsolidation business areas, as required forconsolidation.

Requirements

You must first perform the steps Create business areaandCreate consolidation business area.

Activities

Allocate the business areas to the consolidation business areas in a 1:1 or N:1 ratio.

NOTE:-

Definition: business area

ASAP (Accelerated SAP) (SV-ASA)

A unit in an enterprise that groups product and market combinations as homogeneously as possible for thepurpose of developing unified business policy.


An organizational unit of financial accounting that represents a separate area of operations orresponsibilities within an organization and to which value changes recorded in Financial Accounting can beallocated.

You can create financial statements for business areas, and you can use these statements for variousinternal reporting purposes.

Definition: consolidation business area


An organizational unit within accounting that corresponds to a limited area of operations or responsibility,from a consolidation point of view.

Companies and consolidation business areas together make up the consolidation units that are the basis forbusiness area consolidation.

Consolidation (EC-CS)

An organizational unit within accounting that corresponds to a limited area of operations or responsibility,from a consolidation point of view.

Companies and consolidation business areas together make up the consolidation units that are the basis forbusiness area consolidation.

Documents

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