The name of a company is very valuable – it`s what you`re known for in the market, what your reputation is built on and what you`re trading from. But that doesn`t make it a trademark. Legal persons do not manage themselves. Whether you manage multiple entities or have only one to consider, entity management and governance is paramount to your compliance status. It depends on the type of business you run. If you sell your homemade crafts on Etsy, you probably don`t need to know the answer to the question “How important is a legal entity?” However, if you`re a startup ready to move on to the next phase, it`s a good idea to consider what kind of business structure is best for your business. Jose (Jay) is a senior writer and editor-in-chief of the LegalMatch team. He joined LegalMatch in March 2010. He contributes to the law library section of the company`s website by writing on a wide range of legal topics. His articles aim to provide understandable and easy-to-read explanations of legal issues often asked by people with legal requests. Jose is also a contributor to LegalMatch`s legal blog, which reports on current events and developments in the legal field.
He is the author of an e-book for LegalMatch titled “Everything You Need to Know About Hiring a Lawyer.” Jose holds a J.D. from the U.C. Davis School of Law and a B.A. in Sociology from U.C. Berkeley. He also has experience in general digital marketing, SEO, and content management. When not working, Jose enjoys listening to music and studying jazz guitar. An entity is a person or organization that has separate and distinct legal rights, such as: an individual, a partnership or a business. A business can own property, do business, enter into contracts, pay taxes, sue and be sued, among others. A company is able to act legally, prosecute and make decisions through agents, such as a company, state or association. An association, corporation, partnership, owner, trust or legal or legally recognized individual.
Legal capacity to (1) enter into agreements or contracts, (2) incur obligations, (3) contract and pay debts, (4) sue and be sued themselves, and (5) be responsible for illegal activities. Here`s a global tour of legal entities that goes beyond the U.S. perspective: Compliance and legal departments need to approach the management of these entities from an entity governance perspective. This means keeping a strategic eye on all business requirements and being able to predict the downstream effects of changes in regulations or responsibilities. An original legal name must be chosen before a business entity can be formed. This legal name can be changed in the future, but a business entity can only have one legal name at a time. If you do it right from the beginning, you can save significant resources and headaches later. A legal person corresponds to the concept of legal person. A legal person has rights, and every legal person has legal status. Although the legal entity can be sued for corporate infringement, individual members cannot be sued for corporate violations.
This is one of the main characteristics of a legal entity and one of the main reasons why people would choose to form a legal entity rather than operate independently (i.e. have isolation or a buffer zone of legal accountability). For the purposes of commercial law, a “legal person” is any natural person, company, company or organization that can lawfully enter into a binding contract with another legal person. A legal entity can be made up of many people, but has the ability to function in the same way as an individual, legally speaking. Registered companies are generally considered a legal entity. But what does a legal entity mean and why is it so important to compliance and legal operations teams? A legal person may enter into contracts and assume obligations arising from such contracts, assume and pay debts, sue and be appointed by other parties in legal actions and may be held liable for the results of such actions. As a legal entity, the organization or individual has the capacity: Legal entities are structured to provide a higher level of protection for purely personal assets from prosecution and regulatory sanctions. Each type of business offers different tax protections and burdens.
There are about 15 types of legal entities in the United States that require different variations of documents for legal entities. However, the most common legal structures you can choose from are: Schedule a demo to learn how Diligent`s entity and board management software can help you keep your legal entities on the path to compliance. Without a legal entity, there is no boundary between your company`s finances and liabilities and your personal responsibilities. This means that if your business is sued or goes into debt, you could be held personally liable. Your personal property could be confiscated to pay the debt, or you could be personally sued and face the consequences. Keeping track of all the regulatory responsibilities of your legal entity can be both time-consuming and complex, especially if you add multiple entities within a business structure in the mix. Example TLD: As a legal entity under state law, the company and its executives could be charged with violating criminal laws. Each legal entity receives a Legal Entity Identifier (LEI) – a 20-digit code that serves as a reference to link a company to financial information.
