Single Vs Multi Legal entity setup

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Can I have some pros and cons of a single legal entity Vs multi-legal entity setup in AX2012? I want points which can help me in decision of adopting multiple companies instead of single company

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Sohaib Cheema 49,438 User Group Leader on at

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few years ago I had written some of my analysis based on a real implementation.

it is always a hard choice. :) Have a look please

smcdax.blogspot.co.uk/.../single-company-multi-comapmy-in.html

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Those are wonderful but a bit generic and I am looking for something specific to inventory and accounting perspectives. Can you help me in that

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Sohaib Cheema 49,438 User Group Leader on at

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I am not inventory/warehousing expert, so I would avoid saying anything in that perspective.

yes I agree to you that with arrival of warehouse management in recent versions of ax2012, you have to see impact of single company vs. multi-company.

I can recommend you to explain your question a bit more and then wait for other participants to get some reply.

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Vilmos Kintera 46,149 on at

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Without knowing your specific business requirements on why are you interested in this, we can only provide generic answers. If you provide details about your concerns or requirements, we may be able to help you better.

Other than that, deciding how many legal entities do you require are not that simple.

The most important decision is based on geolocation, since each country has different legal requirements about invoice and address format, taxation rules, audit reports, etc. - and that setup requires separate legal entities within AX so you could make parametrisation unique for that country.

It also depends on your line of business, so for example if you have a retail chain in one country only, they set up the back office as a single company account and they have many retail stores who feed in their data, and are only split by financial dimensions.

The inventory-level separation and tracking is done via site/warehouse and the other stock tracking dimensions, and having single or multiple legal entities only matters from a costing perspective based on your inventory model.

As I said, without knowing more, it is hard to tell you what the right decision is. Consider what we have told above.

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Yes We have warehouses in multiple countries, means will be in seperate legal entities

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Thanks Vilmos for detailed answer,

I want to know we are an Project services company with multiple locations globally. we use transfer pricing means company A gets a project and executes the project, gives services order to company B and C. Company B and C provides the services. Company A book the costs and also margins etc on the services. Similarly the Purchase orders are initiated by Company B and material is received by company C, how all this will work in intercompany. will it add more complexity to the process , which is currently being managed in a single company thru GL. How the material and inventory will work if it is transferred from one WH to other and from one Project to other

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Vilmos Kintera 46,149 on at

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I think that description above answers your question. Multiple geolocations = multiple legal entities to cover local legal obligations for those countries.

Your other requests/questions are much more complex and would be hard to cover it all on the forum, you should be talking to your AX implementation partner who should be capable of providing answers on your specific project + intercompany-related concerns. You may try to open a separate thread for those concerns so this topic stays clean about single- or multiple legal entity setup.

Kindly mark helpful answers as verified to resolve the topic.

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guk1964 10,888 on at

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Usually the choice is made for you when it comes to legal entities - you could have multi companies with only one being a legal entity. Some considerations that drive a legal entity include:

Tax registration id - is this by company, by country or at a group level?

Balance sheets - you really need a separate company

Your Auditors

Different statutory payrolls

Some operational considerations for multi company rather than single company include:

Multi companies to configure, data load, etc

Whether LOBs and data are common, or company specific.

Whether policies are common

Whether you have inter-company processes e.g. man power or capacity scheduling, intercompany purchase and sale

Whether you have group wide customers and vendors , e.g. does a customer raise a multi line order to be fulfilled by several companies? Do you account age by company or by group?

Will you need to consolidate accounts?

Month end processes to run for each company

Whether single company or multi company, there are some things that work across the database global address book, workflow, etc.

Ax has frameworks and features to support multi company operations. So it may not prove to be so complex

SO the answer is .."it depends..."

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