21st Century Accounting Tutorials - Company Setup

Using Model Companies

System/Company/Create is the 21st Century Accounting module that creates the data structures for a new company. Company creation provides a number of "model" companies. You can use any model company as the basis for any company you create.

Create, examine, and delete if necessary; create again

Model companies also include some basic configurations such as sample bank accounts, control accounts, customers, vendors, and pay factors (taxes, incomes, and so forth). Create a company based on a model whose business type fits your needs. Examine the new company. If it doesn't suit you, you can delete it and create another company based on a different model.

The significant difference in different types of companies is the Chart of Accounts. The Equity section of a company's Chart of Accounts identifies a company as a sole proprietorship, a corporation, and so forth.

21st Century Accounting provides model companies that include the following business types with the associated equity accounts that are appropriate for the business type. Additional models may become available over time.

Sole Proprietorship. As the proprietor, you own and control the business. From the standpoint of nearly all legal rights and responsibilities, your sole proprietorship business and you, as the proprietor, are considered to be one and the same.
Partnership. An association of two or more persons formed to carry on a business for profit. As such, it is a special form of business entity separate from the individuals (partners) and is owned by two or more persons each of whom has a specified ownership interest.
Corporation. As a legal entity (an artificial person), the corporation is separate and distinct from the stockholders – the owners of the corporation. A company can be either a C corporation or an S corporation. The two types of corporate entities are subject to differing federal and state tax treatment.
Nonprofit Corporation. An organization formed for the purpose of public or mutual benefit other than the pursuit or accumulation of profits. Nonprofits are recognized and authorized by Congress (as well as state legislatures), which determined that certain types of enterprises should be free from the burden of having to pay income taxes.

The Equity category in each model company currently provided by 21st Century Accounting is set up according to the business type, as described in the following table.

Business Type	Typical Equity Accounts
Sole proprietorship	Retained Earnings Capital
Partnership	Retained Earnings Partner A Capital Partner B Capital Partner A Withdrawals Partner B Withdrawals
Corporation	Retained Earnings Capital Stock Common Stock Preferred Stock Treasury Stock Paid in Capital
Nonprofit Corporation	Retained Earnings General Fund Balance Fixed Asset Fund Balance Restricted Fund Balance Designated Fund Balance Building Fund Balance

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