Xero for Multi-Entity Companies: Consolidation Made Easy

Running multiple entities or subsidiaries introduces complexity, shared costs, intercompany loans, and multi-currency reporting. Without proper structure, bookkeeping becomes inconsistent and consolidation slow. Xero simplifies this with flexible multi-entity management tools. This guide explains how to organize, maintain, and consolidate multiple companies using Xero efficiently and accurately.

Step 1: Create Separate Xero Organizations for Each Entity

Each legal company should have its own Xero organization.

  • Keeps data, chart of accounts, and bank feeds separate.
  • Enables individual tax filings and permissions.
  • Maintains clear audit trails for each business.

This separation is essential for compliance and clean reporting.

Step 2: Use a Consistent Chart of Accounts Across Entities

Uniform account names and numbers make consolidation easier.

  • Start with a master chart of accounts.
  • Apply the same structure to each Xero file.
  • Avoid entity-specific naming unless required.

Consistency ensures accurate consolidated reporting later.

Step 3: Manage Intercompany Transactions

When entities share expenses or loans:

  • Create Due To / Due From accounts in each file.
  • Record mirrored entries in both entities.
  • Reconcile balances monthly so intercompany totals net to zero.

This keeps all internal transfers transparent and balanced.

Step 4: Automate Consolidation with Tools

Xero itself does not natively consolidate multiple organizations, but add-ons fill the gap.

  • Fathom: Consolidates entities for P&L, Balance Sheet, and KPIs.
  • Spotlight Reporting: Offers customizable dashboards for group performance.
  • Syft Analytics: Handles multi-currency conversions and eliminations.

These apps connect directly to each Xero organization and produce group reports automatically.

 Step 5: Handle Multi-Currency Accounting

If entities operate globally, enable multi-currency in Xero.

  • Record transactions in local currency while reporting in home currency.
  • Use Xero’s built-in exchange rate tracking for revaluations.
  • Verify that consolidation tools support currency translation.

This prevents inconsistencies in consolidated financials.

Step 6: Review and Lock Each Entity Monthly

Before consolidating:

  • Reconcile and close each entity’s books.
  • Lock prior periods to maintain data integrity.
  • Generate verified trial balances for consolidation.

Regular discipline ensures smooth consolidation without backtracking.

Step 7: Centralize Reporting and Oversight

Use one dashboard for group metrics: revenue, gross margin, and expenses by entity.
Assign user roles across all organizations for visibility while maintaining security and access control.

Why Multi-Entity Management in Xero Works

  • Separate yet standardized books for compliance and clarity
  • Scalable reporting for growing portfolios
  • Easy consolidation through connected apps
  • Lower total software cost than enterprise systems

With the right workflow, Xero delivers enterprise-grade multi-entity accounting for small and mid-sized groups.

FAQs

Can I manage multiple companies in one Xero account?
Each company needs its own Xero organization, but you can access all from one login.

How do I consolidate multiple Xero entities?
Use add-ons like Fathom, Spotlight Reporting, or Syft Analytics.

Can Xero handle multi-currency consolidation?
Yes, with multi-currency enabled and supported consolidation apps.

How often should I reconcile intercompany accounts?
Monthly reconciliation prevents variances and speeds up consolidation.

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