What is Business Area in SAP – Why Profit Center Accounting is Better than Busines Area

Business area in sap is defined as an organisational area within the financial accounting module. Business area in SAP is used for internal and external reporting.

Business area in SAP is derived through assignments to different master data like assignment to cost center master. The function is to create balance sheet and profit and loss account statement below the company code level.

An alternative to business area balance sheet and PL Account is to go for profit center accounting. Profit center account is used in companies to consolidate performance related to different responsibility area of different company codes.

Business area configuration is not easy compare to profit center accounting. At the end of the year you will have lots of problem in reconciliation of data as business area is not directly related to any company code. Instead profit center accounting will give you better result and is more stable than business area.

To create business area you can use transaction code OX03 or below path;

SPRO > Enterprise structure > Maintain Structure > Financial Accounting > Maintain Business Area

Enter following details;

  • Alphanumeric name
  • Description to it.

How to enable balance sheet for business area in SAP

To get a business area balance sheet we need to enable it in SAP. To enable you can use following path;

SPRO > Financial Accounting > Financial Accounting Global settings > Business Area > Enable Business Area Balance Sheet

Business area is not configured anywhere. The above two steps are the only step to go ahead with the configuration of business area. However it’s integrated in many places with other master data.

Business area is linked to plant or valuation area and division, plant and division, cost center, sales area, assets etc.

Note: SAP and SAP logo is a registered trademark of SAP AG in Germany and in several other countries. We are not affiliated or related to any division or subsidiary of SAP AG.

Editorial Staff at Yourfinancebook is a team of finance professionals. The team has more than a decade experience in taxation and personal finance.