You can run every group entity inside one ERPNext instance. Each company keeps its own chart of accounts and GSTIN, inter-company invoices post reciprocal entries automatically, and a single Consolidated Financial Statement report rolls the whole group into one Balance Sheet, P&L, and Cash Flow.
Short answer
ERPNext supports unlimited companies in one instance, arranged as sister entities or a parent-child group. Each company gets a separate chart of accounts and address-level GSTIN. Inter-company transactions link an internal customer and supplier so a sales invoice in one company creates the matching purchase invoice in another. The built-in Consolidated Financial Statement report merges group financials.
I am Manoj, an ERPNext implementation consultant at Mith Tech in Bengaluru, and multi-company is one of the most common reasons Indian SMBs outgrow their first accounting tool. A promoter starts with one firm, adds a trading arm, spins off a manufacturing entity, and suddenly the books live in three disconnected places. ERPNext is free and open source under GPLv3, and it treats "the group" as a first-class idea rather than a paid add-on. That said, a sloppy multi-company setup is harder to unwind than a fresh one, so the structure decisions you make on day one matter more than any feature.
What does multi-company mean in one ERPNext instance?
Multi-company in ERPNext means several legal entities share one database, one login, and one server, while keeping fully separate books. Companies can sit side by side as sister firms, or nest under a parent in a group hierarchy. Users, items, and reports can be shared or restricted per company, so one team runs the whole group.
The practical win is a single source of truth. You are not exporting spreadsheets between systems or licensing three separate tools. Stock, contacts, price lists, and reports live once and are filtered by company. For a group promoter, that means one place to see who owes what across every entity.
Skimmable summary: multiple legal companies share one ERPNext database while keeping separate books, arranged as sister firms or a parent-child group.
When should you use one instance versus separate instances?
Choose one shared instance when the entities are commonly owned, need consolidated reporting, and trade with each other. Choose separate instances only when the businesses are truly unrelated, have different admins, or face data-isolation requirements. Most Indian SMB groups I work with want consolidation and inter-company flows, so one instance is the default answer.
A single instance gives you group-level dashboards, shared masters, and automatic inter-company posting. Separate instances give you hard isolation at the cost of duplicated setup and manual consolidation. If you are unsure, start with one instance: ERPNext lets you add companies later without rebuilding, and splitting an entity out is easier than merging two databases.
A quick decision rule
If the same finance team closes the books and the promoter wants one consolidated view, use one instance. If the businesses will be sold or governed independently, keep them apart.
Skimmable summary: use one instance for commonly owned entities that need consolidation and inter-company trade; use separate instances only for truly independent businesses.
How do you create multiple companies in one ERPNext instance?
Company creation lives under Accounting, and each new company needs a name, an abbreviation, and a default currency. The abbreviation is important because ERPNext appends it to accounts and warehouses to keep entities apart. To build a group, set the Parent Company field so the new company inherits the parent's chart of accounts structure.
Open the Company master
Go to Accounting, then Company, and click New. Each company is its own master record.
Set name, abbreviation, and currency
Enter a clear abbreviation. ERPNext stamps it onto account and warehouse names so a "Sales - ABC" account never collides with "Sales - XYZ".
Choose the chart of accounts
Pick a standard template, or base it on an existing company. If you set a Parent Company, the chart is derived from the parent so the group stays consistent.
Fill in defaults
Configure default receivable, payable, bank, and cash accounts, plus the letterhead, tax IDs, and fiscal details for that entity.
Repeat and set the hierarchy
Create each remaining company. For a group, mark the holding entity as a group company and nest subsidiaries beneath it via Parent Company.
One structural tip: keep the account naming and grouping consistent across companies. ERPNext validates child-company accounts against the parent for consolidation, and a matching structure is what makes the group reports line up cleanly.
Skimmable summary: create each company under Accounting with a unique abbreviation and currency, choose a chart of accounts, then set Parent Company to build the group hierarchy.
How do inter-company transactions work in ERPNext?
Inter-company transactions let a sale in one group company automatically generate the matching purchase in another. Setup relies on an internal customer and an internal supplier that each "represent" the counterpart company. Once configured, a sales invoice offers an Inter Company Invoice action that auto-fills the buyer entity, keeping both ledgers balanced without double data entry.
Create an internal customer
Tick "Is Internal Customer" on the customer master and, under Allowed To Transact With, add the company that will raise the purchase side.
Create an internal supplier
Tick "Is Internal Supplier", set Represents Company to the customer's company, and add the counterpart under Allowed To Transact With.
Set an inter-company price list
Create a price list with both Selling and Buying enabled, and assign it to the internal customer and internal supplier so pricing matches on both sides.
Raise and mirror the invoice
Post the sales invoice in the selling company, then use the Inter Company Invoice action to generate the purchase invoice in the buying company with supplier and company pre-filled.
One internal party per company
ERPNext allows only a single internal customer and a single internal supplier per company. Plan the direction of your inter-company flows before you start creating masters, or you will end up reworking them.
For entities that move goods between them, the same internal-party concept extends to stock transfers, and for pure financial adjustments you can use an Inter Company Journal Entry that writes the reciprocal entry in the other company. The point of all of this is elimination: reciprocal postings are what let you strip out inter-company balances at consolidation.
Skimmable summary: configure an internal customer and internal supplier that represent each other's companies, then use the Inter Company Invoice action to post both sides of a transaction automatically.
How does GST and multi-GSTIN work for Indian multi-company setups?
GSTIN in ERPNext is linked to the address, not the company header, so each entity or branch can carry its own registration. A group with firms in different states simply attaches the correct address-and-GSTIN to each company. India-specific tax logic now lives in the separate, open-source India Compliance app rather than in core ERPNext.
Since ERPNext Version 15, the Indian GST features were moved out of the core product into the India Compliance app, maintained by resilient-tech. You install it alongside ERPNext to get GST calculation, GSTR return preparation, purchase reconciliation against 2A and 2B, and e-invoice and e-way bill integration with the government portal. Because GSTIN sits on the address, a single company with multiple state registrations can hold branch-wise addresses, each with its own GSTIN, and ERPNext picks the right one based on the place of supply.
Keep GST accounts simple
For most groups, one set of GST accounts covers multiple tax rates and even a multi-GSTIN setup. Resist the urge to fragment your tax ledgers per branch unless your auditor specifically requires it.
If you are weighing the total effort of a compliant India rollout, the moving parts and where the real work sits are covered in my write-up on ERPNext implementation cost in India. GST configuration is usually a bigger line item than the company setup itself.
Skimmable summary: GSTIN attaches to the address, so each entity or branch carries its own registration; install the India Compliance app for GST returns, reconciliation, and e-invoicing.
How do you produce consolidated financial statements?
Consolidation in ERPNext uses the built-in Consolidated Financial Statement report, which merges the Balance Sheet, Profit and Loss, and Cash Flow of every subsidiary under a group company. Run it against the parent entity and ERPNext rolls up the child companies whose accounts align with the parent's chart of accounts structure.
Confirm the group hierarchy
Make sure each subsidiary has the holding entity set as its Parent Company, and that the holding entity is marked as a group company.
Align the charts of accounts
Verify that child-company accounts match the parent structure. ERPNext validates this, and consistent accounts are what let the roll-up combine correctly.
Run the report
Open the Consolidated Financial Statement report, select the group company and the period, and choose Balance Sheet, Profit and Loss, or Cash Flow.
Handle eliminations
Because inter-company transactions posted reciprocal entries, the offsetting balances are already visible and can be eliminated so the group view is not double-counted.
The quality of your consolidation is decided upstream. If the account structures drift apart between companies, or inter-company flows were posted manually on only one side, the consolidated report will look wrong and you will spend the close chasing differences. Clean masters and disciplined inter-company posting are what make month-end fast.
Skimmable summary: run the Consolidated Financial Statement report against a group company to merge subsidiary Balance Sheets, P&L, and Cash Flow, provided the charts of accounts align.
What goes wrong in multi-company setups?
The most damaging mistakes are structural and show up months later at close. Mismatched charts of accounts break consolidation. Skipping the internal customer and supplier setup forces manual double entry and reconciliation errors. Vague company abbreviations create confusing account names. Over-fragmented GST ledgers make returns harder than they need to be.
None of these are ERPNext limitations, they are setup decisions. I have seen groups run beautifully on one instance and I have seen groups fight their own data because nobody agreed on the account structure before creating four companies. The fix is boring but real: design the hierarchy, the shared chart of accounts, and the inter-company direction on paper first, then build. If you want a second pair of eyes on the plan, that is exactly the kind of scoping a good implementation partner does before touching the system.
Skimmable summary: most multi-company problems come from mismatched charts of accounts, skipped inter-company setup, and unclear abbreviations, all fixable by designing the structure before building.
Frequently asked questions
Can ERPNext handle multiple companies in a single instance?
Yes. ERPNext is built for it. One instance can hold many legal companies as sister entities or as a parent-child group, each with its own chart of accounts and books, while sharing one database, one login, and consolidated reporting.
How many companies can I run in one ERPNext instance?
ERPNext does not impose a fixed company limit. Practical limits come from server sizing and how complex your inter-company flows are, not from the software. Groups routinely run several entities in one instance without issue.
Do inter-company transactions post automatically in ERPNext?
Once you configure an internal customer and internal supplier that represent each other's companies, yes. A sales invoice offers an Inter Company Invoice action that generates the matching purchase invoice in the buyer company, keeping both ledgers balanced.
How does ERPNext handle multiple GSTINs for one company?
GSTIN is linked to the address in ERPNext, so a company with registrations in several states holds branch-wise addresses, each carrying its own GSTIN. ERPNext selects the correct GSTIN based on the place of supply.
Is a separate app needed for GST in ERPNext?
Since Version 15, Indian GST features live in the separate India Compliance app rather than core ERPNext. You install it alongside ERPNext to get GST calculation, return preparation, purchase reconciliation, and e-invoicing.
Can I consolidate financials across all my companies?
Yes. The Consolidated Financial Statement report merges the Balance Sheet, Profit and Loss, and Cash Flow of every subsidiary under a group company, as long as the child companies' charts of accounts align with the parent's structure.
About the author
I am Manoj, an ERPNext implementation consultant at Mith Tech, an independent open-source ERPNext and Frappe studio based in Bengaluru. I help Indian SMBs and multi-entity groups design and run ERPNext on the ERPNext platform, with a focus on getting the structure right before the build. You can explore how we work with Frappe and ERPNext across the stack.