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Organisations sharing multiple credit cards

Started by Irwin Lee -   in Accounting

Hello,

I am currently setting up Xero.

We have 2 businesses and they share the use of multiple credit cards for misc purchases. What is the best way to have this set up?

Is it possible to add both the same credit cards to both businesses?

Thank you,
Irwin
I would put credit cards on one business, and for all the spend made on other business, just bill them through XERO.
 

Ray Rong  

Hi Irwin, this'll depend on the type of feed available for your account. You can set up a Yodlee bank feed for the same account in separate Xero orgs, however not a direct feed. If a direct feed is available, you could connect this to one org, and would then manually import bank statements to the second org.

As there will be transactions imported to both orgs that relate to dealings in the other business, you may also find this article on inter-company transfers, useful for recording and keeping track of the transactions for each account.
 

Kelly M (Community Manager)  

Hi

For this, I would recommend to use single Xero account and separate both companies by labeling them different cost centers (tracking categories).

Company would act as different cost centers and you can view all reporting (BS, PL, CF, Agings, Inventory) for each companies and consolidated position.

I did this before for one of my client too.

Ilyas Anis
CPA
+1 312 205 9585
me@ilyasanis.com
 

Ilyas Anis  

Hi Ilyas

Basically this is my group structure.

Company A: Car Sales
Company B: Panel Shop, Cafe, Service (these 3 are grouped by tracking)

Basically all the credit cards are held under Company A. However, most of the credit card expenses are for Company B.

I know I can set up credit cards under Company A and then do journal entries to an inter-company account. However, I am trying to see if there is another (easier) way out.

If there isn't an easier way out, can someone advise how I can put the credit cards in Company B instead of Company A in terms of reporting since we are 1 and a half month away from the end of FY.
 

Irwin Lee  

Hi Irwin

Yeah sure there is the easiest way. You only need to create single Xero account and separate both companies by having different Cost Centers.

The purpose of creating single Xero account is to just use same credit card for both companies. We can even do this for more than 10 companies.

If that does not explain, please leave me email or ring me on Skype @ ilyasmemon7.

Regards

Ilyas Anis
CPA
+1 312 205 9585
me@ilyasanis.com
Skype: ilyasmemon7
 

Ilyas Anis  

The better way would be to get a credit card for Company B and use only A's card for A's transactions and B's card for B's transactions.
 

Nancy Leach  

Hi Nancy

In that approach, the balance would never be tied.
 

Ilyas Anis  

Sure it would. Each company feeds its card to its books.
 

Nancy Leach  

Hi Nancy,

Maybe there are subscription fees charged on one card but the service shared between 2 company?
 

Ray Rong  

Best practice is do not ever comingle funds. Get a card for each company and make it right.
 

Nancy Leach  

Hi

I have given below suggestion to Irwin through email. It might be useful for anyother reader.

Question: Company A is only dealing with car sales so no tracking is required.

Company B is dealing with vehicle service, panel shop and a cafe these are 3 cost centres itself in company B and tracking has been set up.

Company A has the credit cards but mainly used in company B’s purchases.


Answer: So both will be having separate Xero accounts. However credit cards will be maintained in Company A books.

Whenever Company B is making purchases from Company A credit card, do following steps:
1- Prepare COA in Company A as RECEIVABLE FROM COMPANY A (CURRENT ASSET) and select enable payment
2- Prepare COA in Company B as PAYABLE TO COMPANY A (CURRENT LIABILITY) and select enable payment
3- Prepare bill in company B.
4- Make payment in company B by COA named PAYABLE TO COMPANY A.
5- When reconciling bank feeds in Company A, you need to select RECEIVABLE FROM COMPANY A.
6- Both COA should be matching with the same amount. At the end of regular intervals, Company B should reimburse outstanding balance to Company A.

Hope that clarifies.

Regards

Ilyas Anis
CPA
me@ilyasanis.com
+1 312 205 9585
 

Ilyas Anis