How entities shape everything
An entity looks like a piece of setup you configure once and forget. In practice it is the division running through every screen in BMS, and several things that seem unrelated are the same fact seen from different places.
What an entity is
A trading division of the business: a legal company, a branch, or a brand that trades under its own name. Each has a code, a trading name, and a one-letter prefix.
What follows from it
Document numbering is per entity. Every reference carries the raising entity's prefix, and each entity counts its own documents. This is why two current orders can have wildly different numbers, and why comparing references across prefixes tells you nothing.
Stock, warehouses and stocktakes are entity-scoped. A stocktake is against one entity and one warehouse — a warehouse holding stock for two entities needs two counts, because the stock belongs to two different businesses that happen to share a building.
Accounting rolls up to an organisation, not an entity. Several entities can belong to one organisation. Branches of one legal company keep separate document numbering and separate operational identity while reporting into a single set of books — and, therefore, a single Xero connection.
Why the two levels exist
Because operational identity and legal identity are not the same thing, and forcing them together breaks one or the other.
If entities were the accounting unit, every branch would need its own Xero organisation, its own chart of accounts and its own reconciliation — for a business that files one set of accounts. If organisations were the operational unit, all the branches would share one document sequence and lose the ability to tell at a glance which office raised what.
Splitting them lets the business be as divided as it needs to be operationally and as consolidated as it actually is financially.
Where this surfaces
- A reference's prefix tells you the entity; only the organisation tells you the books.
- Connecting Xero is done per organisation, so connecting once covers every entity under it.
- A separate legal business needs its own organisation, and its own connection.
(On Hold)beside a customer, seen across every module, is a fact about the trading relationship, not about the entity viewing it.