I have two sepearte cost centres in my business for which I'd like to be able to generate completly seperate P&Ls for internal tracking and reporting.
The one issue is that there are obviously some shared costs which need to be accounted for.
To make it easier for myself, I have set it up so that there is a bank account for each cost centre plus an additional one for any joint expenses. Once a month, I deposit an equal amount from the cost centre bank accounts to the joint bank account to cover any shared expenses.
My question is how to set it up in Xero. Ideally, each cost centre would report a totally seperate P&L, but would combine for reporting to tax man, etc. I've got most of the way by setting up 'tracking categories' in Xero which allows things to be nicely sepearted, but I'm trying to avoid a situation where I have to duplicate line items for each joint expense.
Therefore, I'm wondering if it's possible to simply leave any joint expense tracking categories unassigned, and then use a journal entry each month to make the transfers.
Something like: each month, an equal 'Joint Expenses' transaction credits a joint expenses account with the activity specified, and debits the bank account of each cost centre with activity also specified. Then, an additional transaction is made to debit the joint expenses account, and credit the joint bank account.
This would hopefully mean that the consolidated report would have the Joint Expenses account hidden as its credits and debits should balance, whilst the reports broken down by category should show Joint Expenses.
Does this make sense? Is there a better way?