Multi-branch accounting for a small business

What is multi-branch accounting?

Multi-branch accounting is one set of books for one business, where every invoice, bill, salary and expense carries the branch it belongs to. The ledger stays whole, so the balance sheet and GST are right for the business, and ledger and sales reports can be filtered to one branch.

The alternative, a separate book for each branch, looks tidy until month end, when someone has to add them together and remove the transfers between them.

Should each branch have its own books?

Branches of one legal business should share one set of books; separate companies need separate books. The test is the legal entity, not the address.

One ledger also means one set of customers, suppliers and products. A customer who buys at both branches has one balance and one statement, and a product has one cost wherever it sits.

Does each branch need its own GSTIN?

GST registration is generally per state: branches in the same state can be added to one GSTIN as additional places of business, and a branch in another state needs its own registration in that state. The first two digits of each GSTIN show its state.

• Each GSTIN files its own returns, so invoices must carry the GSTIN and address of the branch that makes the supply.
• Place of supply is compared with the state of the branch that bills, not the head office.
• Optional separate registrations within one state are possible for distinct places of business; ask your CA whether they help you.

How should inter-branch stock transfers be handled?

A transfer between two locations under the same GSTIN is a stock movement, not a sale; a transfer between two GSTINs is generally treated as a supply under GST and needs a tax invoice. That difference decides how you record it.

How does a branch profit and loss work in practice?

A branch P&L is the business's income and expenses for the transactions tagged with that branch. Take Lakshmi Steel Furnitures, the fictional Coimbatore business on this site. It has a head office with the Main godown in Peelamedu and a retail branch at Ukkadam with its own store, both under GSTIN 33AAACL1234A1Z5.

Ukkadam earns a gross margin of about 45% against about 43% at the head office, on far lower sales. Whether that is good news depends on the costs it carries, which is the next question.

How should shared costs be split between branches?

Shared costs stay with the branch they are posted to unless you deliberately split them, so decide the rule before you read branch profits. Rent, power and salaries at a branch belong to it. The owner's salary, the accountant and head office rent serve every branch.

• Leave them at head office. Simplest, and branch profit then means "profit before head office costs".
• Split by a fixed key. Sales share, floor area or headcount, agreed once and applied every month.
• Split only for decisions. Keep the books simple and apply the split in a spreadsheet when you review a branch.

SimpleERP does not allocate shared costs automatically, and its P&L covers the whole business. For a branch view, filter the general ledger by branch, export it to CSV and total the income and expense accounts; most small businesses then apply the first or third option in that sheet.

What should you set up when you open a new branch?

• Check with your CA whether the branch needs a new GSTIN or an additional place of business
• Create the branch with its address, state and GSTIN
• Create at least one warehouse for the branch and move its opening stock in with a transfer
• Assign the branch's employees to it so attendance and payroll follow
• Bill from the branch so invoices print its GSTIN and address
• Decide the shared-cost rule before the first monthly review
• Review each branch's sales, ledger and stock each month alongside the whole-business P&L

How does SimpleERP handle multiple branches?

SimpleERP keeps branches hidden until you add a second one, then tags every document with its branch inside one ledger.

• Each branch has its own address, state and GSTIN, and invoices from it print them.
• GST type is picked by comparing the branch's state with the place of supply.
• Each branch has its own warehouses; stock is valued at one weighted average cost per product across the business.
• The general ledger, sales and purchase reports, GST registers and HSN summary filter by branch; the P&L and balance sheet cover the whole business.
• Employees belong to a branch, and a payroll run can cover one branch or the whole business.
• Document numbering is one series per document type across the business.

For the full picture see the multi-branch business page and reports and dashboard. Separate companies are separate SimpleERP businesses; combined statements across companies are not included.