Profit Center and Business Area
This article will help you understand the difference between a profit center and a business area in SAP system.
Profit Center is an organizational unit that is management-oriented use for internal controlling purposes. Structuring your company up into profit centers allows you to monitor and analyze areas of responsibility and to delegate responsibility to each decentralized units, thus treating these profit centers as "companies within your company". Each profit center is assign to one Controlling Area. Balance sheet and income statements can be generated for each profit center, thus allows you to generate a segmental reporting.
On the other hand, business area is an organizational unit in financial accounting that represents a separate area of operations or responsibilities within your organization. It is mainly use to facilitate external segment reporting across company codes, covering the company's main areas of operation e.g. product lines, branches, etc. Balance sheet and income statements for each business area can also be generated.
The indespensable difference between a profit center and a business area is that the former is use for internal control; whereas, the latter is more geared toward to an external viewpoint.