What is Company and company code in SAP FICO?

In the SAP (Systems, Applications & Products in Data Processing) system, “company” and “company code” are distinct organizational units with specific roles in financial accounting.

About Company:

• Definition:

• A company is nothing but six-digit alphanumeric key created at the highest level of organizational unit in financial accounting for consolidation purposes.
• It represents a consolidated entity for legal reporting.
• Think of it as a parent company that can encompass multiple subsidiaries.

• Purpose:

• Primarily used for consolidated financial statements.
• It facilitates group-level reporting.
• Represents the overall legal business organization.
• To create Company is an optional activity.

In Conclusion: Company is used for Consolidated financial reporting comprises of multiples legal entities.

Create Company in SAP:

About Company Code:

• Definition:

• A company code is nothing but 4-digit alphanumeric key which is the smallest organizational unit for which a complete, self-contained set of accounts can be created.
• It’s a legally independent entity within a company define as per the Companies act to generate external reporting.

• Purpose:

• Used for individual financial statements (balance sheets, profit and loss statements).
• Transactions are recorded at the company code level.
• It is the legal entity that deals with posting of day to day business transactions.

• In Conclusion: Company code is defined as a separate legal entity to generate financial statements for external reporting.

Create Company code in SAP:

Many People confuse between the term Company and company code and use it interchangeably, here is the Key Highlights:

• A company can be assigned to multiple company codes.
• A company code is contained within a company.
• The company provides a consolidated view of the financial data from its company codes.
• Company codes perform the day-to-day transaction processing, while the company focuses on overall financial reporting.