In SAP world, very frequently you might be coming across the Word Company and Company Code. Sometimes it is understood that these two words are interchangeable and have the same meaning. But in fact, these are not interchangeable and are two different words with different meaning. Hence one should not derive the same meaning from the two. In SAP, to understand the definition and assignment of enterprise structure and terminology used for different organizational level, it is necessary to understand the following definition of these two words.
As defined by the law of a particular country, company means an organizational unit in Accounting which represents a business organization according to the requirements of commercial law of that particular country. In SAP Basic data such as company ID, name & address, language & currency are stored under the definition of company. The following are attributes of a company.
A company can comprise one or more company codes.
A company can comprise one or more clients.
A company has one local currency
Group Accounting is possible at Company Level
Consolidation is based on Companies
In SAP, the company code is an organizational unit used in accounting. It is used to structure the business organization from a financial accounting perspective. It should be created according to tax law, commercial law, and other financial accounting criteria. 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 external reporting requirements for this operating unit, which can also be in the relevant local currency.
Appended below is some of the important information which needs to be maintained for each company code: