How to manage GST across branches using online GST accounting software?

When you have a trading company that is expanded to other locations and established as a separate office but is under the head office”™s control is known as the branch of the company.

Reach is an online GST accounting software that is one of the best accounting software which is built for managing multi branch business. It allows you to create separate account for all the branches and helps the branch managers to manage it individually keeping a neat account for every office.

Reach ERP is a collection of all the modules that is required for managing a business and it generates functions that helps in taking care of more business processes in a smarter way.

Why does Reach ERP works best for multi branch entities?

Two methods of Branch accounting

• Branches and Head office can keep separate record
• Head office keeps records of branches

Scenario-1

Account kept by branch

• Head office and branch will open a full set of books to record their own transactions
• Create branches from settings
• The head office current account is opened to record transactions between them
• Create Head office as a separate Branch in Reach ERP and not as an admin branch
• Branch current account is opened to record transactions between the head office and the branch

Transactions

Transactions

Transactions

Intercompany transactions

• It would not be transferred to the total column of trading and profit and loss account and the balance sheet
• For example, goods sent to the branch , goods from head office overheads charged by the head office, service overheads charged by the office to the branch, head office current account, branch current account provision for unrealized profit.

Goods sent to branch for mark-up

• The head office supplies goods to it”™s branches with an invoice price at cost plus profit
• Goods sent to branch a/c and goods received from HO a/c are valued at invoice price
• If there is unsold stock at the end of the accounting period, the unrealized profit-in-stock must be eliminated from the consolidated final accounts
• A provision for unrealized profit a/c will be opened to measure unearned profit included in the closing stock of the branch and reflect in the HO”™s book

Provision for unrealized profit

Stock at mark-up     Mark up 100% Mark up

• Stock mark up = closing stock at branch sent from HO+ goods in transit
• Closing stock of branch include goods directly purchased from suppliers will not be concerned in the calculation of the provision of unrealized profit

Provision for unrealized profit

Increase in provision Dr P/L

Cr provision for unrealized profit

Decrease in provision Dr provision for unrealized profit

Cr p/l

• The increase or decrease in the provision should be entered in the profit and loss a/c
• The balance should be appear in the balance sheet under current liabilities
• The total stock= stock in HO+ stock in branch +stock in transit-provision for unrealized profit

Stock loss

Stock loss

Goods in transit (GIT)

• Goods were sent by the head office before the end of the financial period, but received by the branch after the end of the financial period
• GIT=goods sent to branch- goods received from HO

Remittances/Cash in transit (CIT)

• The remittance or cash was remitted by the branch before the end of the financial period, but was received by the head office after the end of the financial period
• CIT- remittance to head office-remittance from branch

Preparation of the final accounts

• Separate trading and profit and loss accounts and balance sheets would be prepared for the head office and the branches

Scenario-2

Account kept by Head office

• The branch do not keep their own records, the HO will keep all accounting records for the branch transactions
• Branches will be created from settings
• HO will operate as admin branch

Goods are invoiced to the branch at the cost plus profit

Transactions

Preparation of the final accounts for the head office

• After calculating the branch profits or losses, the overall profit and loss for the head office can be computed

Account entries

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Sumathi

I’m a tax expert with over 10 years of professional experience. I’ve gained practical insights on GST and other Taxes during my tenture as a Tax expert and GST Trainer in Reach Accountant.