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What is Company and Company code in SAP and relationship between both?

Updated: Mar 24

"Company" and "Company Code" in SAP are two distinct organizational structures used for financial and accounting purposes.

  1. Company: A company in SAP represents a legally independent entity or organization. It is typically associated with a legal entity that operates as a separate business entity, often having its own financial statements, tax identification number, and legal reporting requirements. A company in SAP can have one or multiple company codes assigned to it. The company level is used for high-level financial consolidation and reporting across different company codes.

  2. Company Code: A company code in SAP represents the smallest organizational unit for which financial accounting can be carried out independently. It is the primary entity for financial accounting and serves as the basis for the creation of financial statements. A company code is assigned to one specific company and represents its financial accounting entity within the SAP system. Each company code has its own chart of accounts, fiscal year, and reporting currency.

In summary:

  • Company: Represents a legally independent entity or organization and may consist of one or more company codes.

  • Company Code: Represents the smallest financial accounting entity, each assigned to a specific company, and is used for managing accounting transactions and generating financial statements.

The relationship between companies and company codes allows SAP to handle complex financial and accounting requirements for organizations with multiple legal entities or business units while maintaining the necessary separation of financial data and reporting for each entity.

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