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Dynamics 365 Community / Forums / Microsoft Dynamics AX (Archived) / Multiple Legal Entity ...
Microsoft Dynamics AX (Archived)
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Multiple Legal Entity Per Company

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Posted on by Samuel Johnson 230

Hi,

Our company is migrating their B2B ERP Stack to Dynamics AX 2012 R2. It has multiple services and hence multiple Legal Entity (3 Legal Entity). We were given a direction of using one Company for all the Legal Entity, as this is against the recommendation of Dynamics AX Architecture, i wanted to know the pitfalls that we are likely to face while doing this design. Can someone please guide about list of aspects that i should explore to do this design? what would be the additional development in the areas of CRM, Finance etc? please guide.

Regards

Sam

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  • Verified answer
    André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 300,904 Super User 2025 Season 2 on at

    Hi Samuel,

    I'm not a fan of using multiple legal entities in one company in AX. I would like to ask you what would be your benefit of doing so?

    You have to take care of:

    - All number sequences are shared. Do you need invoice number sequence per legal entity?

    - Sales Tax reporting. Is this per legal entity? Then you have to do a different setup to make this possible per entity.

    - Every transaction would need an additional dimension to identify the legal entity for reporting

    - Not possible to assign roles per legal entity.

    - ...

    There are possible other reasons, but these four are mostly enough to convince the customer to do not do it.

  • Samuel Johnson Profile Picture
    Samuel Johnson 230 on at

    Hi André Arnaud,

    Thanks a lot for the response. You are correct at the moment we are trying to change the design option from One Company to Company Per legal entity. Can you please let me know the following

    1. When you say Sales Tax Reporting needs additional set-up is it just a one time configuration or do we have to invest more development effort to achieve this?

    2. "Not possible to assign roles per legal entity" - If the Design Authority insist on customizing the Security Model do you think if it would be achievable? or does it mean providing data level security which will be huge development. Any hints on this would be great.

    Thanks again for your time.

    Cheers

    Sam

  • André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 300,904 Super User 2025 Season 2 on at

    Hi Samuel,

    Great questions.

    1 In fact you have to setup up tax groups and tax codes per legal entitiy. The tax codes are linked to a so called "settlement period". This will be one or more periods per legal entity. This will be a one time setup, but you can only apply one default sales tax code to e.g. a customer. Per sales order you have to choose the appropriate Sales Tax group. So when you don't pay attention the outcome of the sales tax is correct, but will be reported within the wrong company.  Probably a customization can improve this.

    2 When you want to restrict data based on an organization unit (e.g. Business Unit), you have to create eXtensible Data Security (XDS) policies. You might need a lot of these policies. Also it is not possible to assign more policies based on the same table to one role. I don't know your exactly needs for securing which parts, but it could be a huge development. Also it can slow down the performance when there are too many or when queries with incorrect indexes are used. incorrect Standard AX security caters for resctricting data per legal entitiy.

    If you have further questions, do not hesitate to ask them here.

  • axerp Profile Picture
    axerp 2,600 on at

    [quote user="Andre Arnaud de Calavon"]I'm not a fan of using multiple legal entities in one company in AX.[/quote]

    I did not understand above sentence , How it is possible to have the multiple legal entities in one company ( Ax terminology Legal entity is nothing but a company ) ?

    generally we will create the multiple legal entities in one database , So You to say that multiple legal entities in one database ?

  • André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 300,904 Super User 2025 Season 2 on at

    Hi AXERP,

    Sometimes people don't want to setup multiple companies or think they will benefit from shared data. Then they want to use multiple companies in just one legal entity. When people are doing this, they mostly encounter some problems after they started working with the system which they did not think of.

    Yes you are right: legal entity = company   and   company = legal entity.

    Personally I think it is better to have this rule maintained. There are other ways to collaborate with data in AX.

  • Community Member Profile Picture
    Community Member on at

    Samuel,

    You can create a custom dimension to manage the legal entity this way every transaction has a legal entity dimension.

  • Community Member Profile Picture
    Community Member on at

    Andre,

    Can you provide me some document or points which can help me in deciding multiple legal entity over single. Some sort of pros and cons comparison

  • André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 300,904 Super User 2025 Season 2 on at

    Hi Mudassar,

    You can read my comments above. I don't have a document. When my customers ask to have multiple companies in one legal entity, then I do say: "No". And then mention all the cons which are also listed above.

  • siddhartha21 Profile Picture
    siddhartha21 10 on at

    I am having operations in five states in India with 5 GST Numbers and 5 TAN numbers respectively for all states. I am trying to create an organization structure a below:

    Legal entity >> business units

    now in business unit there is no option to enter GST and TAN details.

    I wish to keep all chart of accounts common. Kindly assist

  • guk1964 Profile Picture
    guk1964 10,888 on at

    The first consideration is whether you need to provide a balance sheet for each legal entity. There are many problems doing this in a single Ax company. You can use a balancing dimension but its not an ideal solution.  

    Are bank account shared or does each company have its own accounts?

    Segmenting vendors, customers orders, item codes, orders, by company, by security role, is not trivial  - how common are the lines of business and data between each company is the data in any case shared?

    Each legal entity presumably has its own commercial forms and each might sell to the same customer, so each time you print you may have to make a report selection.

    Tax set up as mentioned will be a challenge.

    Auditors and investors will not like it.

    Ax has many features to support multi-company operations and shared services in  one multi company environment - so its worth understanding what re the real issues and whether there are system features that already address those.

    I suggest take advice from a Senior consultant on your specific challenges.

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