Understanding Entities

If you're new to REDA Financials, this is the right place to begin. Before you raise a single invoice or record a payment, REDA needs to know who the books belong to — and that "who" is an Entity. Almost everything else in the system depends on it. This article explains what an entity is, why it matters, and how it fits together — in plain language, assuming no prior accounting background. By the end you'll understand the single most important record you'll set up.

What is an entity, really?

An entity is a company that keeps its own complete set of accounting records. Accountants call that a "set of books." If your organisation is a single company, you have one entity. If it's a group — a parent with subsidiaries, or separate companies in different countries — each legal company is its own entity, with its own books.

A real-world company isn't just an idea — it has a legal name, a registered address, a tax registration number, a home currency, and a financial year. An entity in REDA holds exactly those things, plus the accounting settings REDA needs to post transactions correctly. Set it up once, carefully, and every document you create afterwards inherits the right behaviour automatically.

Why the entity is the centre of everything

In REDA, nearly every record points back to an entity: Sales Invoices, Purchase Invoices, the payments you receive and make, Journal Entries, Bank Accounts, Budgets, Capital Assets, even the individual accounting entries the system posts behind the scenes. That single link is what lets REDA answer the question every business asks: "How is this company doing?" Filter anything by entity and you have that company's complete financial picture — nothing from any other company mixed in.

Do you need one entity or several?

You create a separate entity whenever a part of your organisation needs to keep its own books. The usual triggers:

The three-level picture: Territory, Entity, Parent

An entity sits inside a small structure. Understanding these three levels makes the rest of REDA click into place:

Two concepts the hierarchy unlocks

You don't need to master these on day one, but it helps to know what the structure is for:

• Consolidation — combining several entities' results into one set of group accounts (e.g. seeing the whole Meridian group's revenue, not just one country's). The Parent Entity link is what tells REDA which companies belong to the group.
• Intercompany — what happens when two of your own entities transact with each other (one lends to or invoices the other). REDA can record both sides and keep the group's books in balance. The dedicated intercompany accounts on the entity (covered later) make this automatic.

A worked example — Meridian Properties Group

Throughout this Help Center we follow one example group, so the ideas stay concrete: Meridian Properties Group, a real-estate business operating in four countries — which means four legal companies, four currencies, and four sets of books:

Four companies, four countries, four currencies. That's enough to illustrate single-company setup, multiple currencies, differing fiscal years, consolidation and intercompany without being abstract — and the same group appears in worked examples across the rest of this Help Center, so the whole picture joins up.

What an entity holds — the nine areas

An entity record bundles nine kinds of configuration. You won't set all of it by hand — much is inherited — but here's the whole map, with why each one exists and where it's covered in depth:

An entity is born pre-configured

Here's the part that saves the most time. The first time you save a new entity, REDA looks up the accounting defaults for its territory (falling back to the parent territory's defaults, and then to the global defaults, if the territory has none of its own) and copies any account you left blank onto the entity automatically. It only fills the blanks — anything you set yourself is left untouched. So a new UK company instantly has the UK receivables account, the UK bank account, the UK revenue account, and so on, without you typing a single GL code.

This is why the setup order is Territories & Defaults → General Ledger → Tax → Product → Entities: by the time you create an entity, everything it needs to inherit already exists.

An Entity record — REDA One LLC. The highlights bar across the top summarises the books at a glance (code, currency, basis, fiscal year, territory). The Details tab groups every field, and the Related List Quick Links on the right show everything that hangs off this entity — its child companies, document sequences, bank accounts, tax registrations and more.

The safety rails — and the accounting reasons behind them

Because an entity is a live set of books, REDA protects a few things once the entity is in use. These aren't arbitrary — each one prevents a real accounting problem:

Common situations

Where to go next

1. Creating an Entity — build your first company step by step.
2. Entity Fields Reference — every field on the record.
3. Entity Default GL Accounts — the accounts each entity posts to.
4. Accounting Basis (Accrual vs Cash) — a core entity accounting choice.
5. Fiscal Year Start Month — the entity's financial calendar.

Frequently asked questions

Your path through this section

1. Creating an Entity — build Meridian Properties UK Ltd, step by step.
2. Entity Fields Reference — every field, grouped and explained.
3. Entity Default GL Accounts — the accounts the system posts to, and what hits each.
4. Accounting Basis & Fiscal Year Start — revenue recognition and your calendar.
5. Document Sequences — how invoice and journal numbers are built.
6. Then Multi-Currency (for groups with more than one currency) and Application Settings.