How to define Company in SAP and what relationship it has with company codes

A company in SAP is formed as an organizational unit for which financial statements are required to be drawn as per the legal requirements of the country. Its defined at client level. This means its assigned below the client level to which all other units are assigned in SAP.

Company can be defined in SAP with transaction code OX15 or through following IMG path;

  1. Enterprise structure
  2. Definition
  3. Financial accounting
  4. Define COMPANY


Table T880 is used in SAP to store the values of company in SAP. Following fields are to be entered while defining it in SAP;

  • Company – maximum six characters are used to define it
  • Company Name – maximum 30 characters are used to describe it
  • Detailed information – address is entered in this field. In addition to that, it’s also required to assign language key and currency.

SAP has delivered two character keys to represent all most all languages that may be required to assign. If you want English as a default language then EN can be assigned to the field of “language key” or else you need to select another based on your local language.

The most important field used while defining company in sap is “currency”. Assigned currency to this field will be known as country currency or local currency as all transactions that are entered into SAP for the company is updated in this currency. If local currency is different from group currency then all the transactions entered has to be translated to get reflected in group currency.

Company codes are created below the company in SAP to represent the smallest organizational units. It’s used to get complete set of accounts of a particular organizational unit besides the statutory balance sheet and profit and loss account.

Company can be assigned to one or more company codes. If it’s assigned to more than one then all such company codes has to be assigned with the same operative chart of accounts and fiscal year variant. At least one company code has to defined and assigned to company in SAP. Data are stored in table T001.

Example: XYZ limited has business in India. It also has two legally independent units in US and UK. To define in SAP, you have the option of creating XYZ001 to represent it as company and XYZ1, XYZ2 to represent both company codes that is in US and UK respectively. Based on business requirements it can be changed and created differently in SAP.

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