Microsoft Dynamics 365 Business Central is available in many countries, each with its own localizations to meet specific legal business requirements and common business practices in that market. Each environment in Dynamics 365 Business Central has a localization assigned to it – every time you create an environment you tell it what country in which it will be operating. The code base, screens and functionality are all specific to the country chosen, in order to satisfy the local government compliance and reporting requirements for that country. For example, taxes, reporting of sales tax and 1099 in US, VAT in Europe, etc.
You can view the full list of currently available localizations by country here.
In some cases, your company might have operating entities and you are doing AP and AR in multiple countries. In some cases, you may be large operating company with not just GL type transactions where you have a local account but may want to calculate taxes for each country separately. You have 2 options:
Let’s say you are a small operating company in USA where its manageable to calculate taxes offline. In this case, you can add a new company to that same environment – the same US localization – and then calculate taxes manually.
If you are a very large company with lots of transactions and complications and you want to automate all the tax compliance and reporting, then you can create a new production environment. This new environment, let’s say UK, will have UK localization and tax reporting functionality.
There are some pros and cons of both options.
Option 1, Adding a new company in the same environment:
Pros: Keeping it all within one environment makes it easier to navigate if you are switching between companies. It is easier to consolidate. You don’t need to copy data between environments. It is less costly and you don’t need to pay for another environment
Cons: You have to do your calculations manually and so it is more error prone.
Option 2, Separate tenant/creating a new environment:
Pros: It is very fine-tuned for the tax and reporting requirements for that country. Less manual effort.
Cons: Each production environment requires a subscription and usually there is a bit more consulting time in configuring the separate localization. It also takes more time to implement. It’s another step in the consolidation process and reporting on a consolidated basis comes with more clicks.
Something to keep in mind is that if you ever add a company in a different country, it is going to have a fair bit of complexity in local tax and reporting requirements.
Tensoft has experience with localization and has helped customers with both. To learn more on this topic, contact us!
– Jason has over 20 years of financial leadership experience in high growth technology companies. He is a Microsoft Certified Dynamics 365 Business Central Functional Consultant Associate. See Credential.
