Multi-entity accounting is keeping the books for a group of related legal entities, such as a parent and an LLC for each location. Each entity has its own bank accounts, payment processing account and set of books, ideally on the same chart of accounts. Money and services that move between entities are recorded as intercompany transactions on both sides, reconciled each month and settled by transfer. To see the group as a whole, the entities' results are combined and the intercompany amounts are eliminated so the group isn't shown trading with itself. How to present combined statements is a question for your CPA.
What is multi-entity accounting?
It is accounting for a business made of more than one legal entity. A common shape in multi-location businesses is a parent or management company plus an LLC for each location. Each entity is its own business on paper, with its own tax ID, so each keeps its own books. The owners still want to see the group as one.
Is it the same as tracking locations?
No. If every location sits inside one entity, you have one set of books and tell locations apart with classes or locations. Multi-entity accounting starts when there is more than one entity, because each one must report on its own.
What does each entity need?
- Its own bank account in its own name.
- Its own payment processing account. Stripe ties each account to "the tax ID and legal entity of one business," so separate entities need separate accounts.
- Its own set of books, with its own bank reconciliation each month.
- The same chart of accounts as the others, where possible, so results compare and combine line for line.
How do the entities deal with each other?
Through intercompany transactions. A shared cost, a management fee, a loan or a misdirected customer payment is recorded in both entities' books through due-to and due-from accounts. Each month an intercompany reconciliation checks that the pairs agree, and the balances are settled by transfer.
What does combining the entities involve?
Adding each entity's results together, then removing what the group did with itself. These removals are called eliminations.
A worked example. A management company charges three location LLCs $18,000 a month in total. Before elimination, the combined profit and loss shows $18,000 of management fee income and $18,000 of management fee expense. Neither is earned from or paid to anyone outside the group.
| Line | Management co. | Three LLCs | Elimination | Combined |
|---|---|---|---|---|
| Management fee income | $18,000 | −$18,000 | $0 | |
| Management fee expense | $18,000 | −$18,000 | $0 | |
| Due from the LLCs | $18,000 | −$18,000 | $0 | |
| Due to the management co. | $18,000 | −$18,000 | $0 |
The combined profit is the same before and after, because income and expense fall by the same amount. What changes is that the report no longer overstates revenue and costs, or shows the group owing itself. Eliminations only work when the intercompany balances already agree, which is why the reconciliation comes first.
Whether you need formal consolidated statements, and how to prepare them, depends on your lenders, investors and structure. Ask your CPA.
How does the payment side fit?
Each entity's customers should pay into that entity's own processing and bank account, so the money and the sale land in the same books. Stripe also offers organizations for central reporting across several accounts that belong to the same business. When a payment lands in the wrong entity, it becomes an intercompany entry rather than a simple reclassification.
What makes it easier month to month?
- One chart of accounts used by every entity.
- One due-to and one due-from account for each counterparty.
- Intercompany entries recorded on both sides the same day.
- A fixed schedule: reconcile banks, reconcile intercompany, settle, then combine.
General information, not accounting or tax advice.
Every figure on this page was checked against these sources on Oct 6, 2026. General information, not legal or tax advice.