Back
 

Legal Entity

iWare Logic > Blog  > Legal Entity

Legal Entity

A Legal entity represents a legal company for which you prepare fiscal or tax reports. You assign tax identifiers and other Legal entity information to these types of organizations. A Legal entity is identified through the registration with Legal Authority.

Types of Legal Entities

GRE/Legal entity: Use this classification to represent the following organizations.


Ultimate Legal Entity
The ultimate legal entity represents the enterprise, and typically, the enterprise is the highest (global) level of a business organization. The ultimate legal entity is the parent company or organization for all its subsidiaries and divisions. Oracle HRMS represents the ultimate legal entity with the GRE/Legal Entity organization classification.

Legal Entity/Employer
A legal entity represents the designated legal employer for all employment-related activities. The legal authorities in a country recognize this organization as a separate employer. In an organization hierarchy, a legal entity may report to an operating company or to the ultimate legal entity.

A legal employer is a legal entity that is responsible for employing people in a particular country. Therefore, if you employ people in a country, then you must have at least one organization classified as a legal entity and a legal employer.

The Configuration Workbench classifies an organization as a GRE/Legal Entity where your enterprise operates in a country, and classifies it as an Employer if you employ people in that country also. For example, you can have a legal entity in a country where you do business, but do not employ people in that country.

Consolidated Legal Entity
A consolidated legal entity acts on behalf of multiple operating companies that are not legally registered, or simply on behalf of the enterprise in a country. You typically use the consolidated legal entity for when you have multiple operating companies in your enterprise, but for the purposes of consolidation, you group the information into one organization. For management reporting purposes, the organizations below the consolidated legal entity in an organization hierarchy, such as, your departments and sections, can report to any organization in the enterprise. However, for legal reporting purposes, they report up to the consolidated legal entity.

Single Operating Company in One Country

Single Operating Company in One Country

The preceding diagram shows the basic configuration for a small or medium sized enterprise with little or no complexity in operating structures. Vision Corporation is the ultimate legal entity, and for reporting purposes, this organization holds any data associated with the enterprise. Every enterprise has one ultimate legal entity.

This simple enterprise structure is based on the best practice configuration model. Creating the key enterprise structures as separate organizations enables your enterprise to expand and acquire new companies whilst reducing the cost of re-implementation.

Single Operating Company in Multiple Countries
The preceding diagram shows a configuration for a medium or large enterprise with some international operations introducing a degree of complexity. It also shows that operations and people in some countries are held within an international business group (XZ). You can see that the business groups represent countries, and do not appear in the organization hierarchy. This is based on the best practice configuration model.

Multiple Operating Companies in One Country

Multiple Operating Companies in One Country
The preceding diagram shows a configuration for a multi-company enterprise operating in a single country. This type of complexity can exist in any size of enterprise. Vision Lighting and Vision Security in the diagram are represented as operating companies. Every enterprise has at least one operating company. This may be a division, or a subsidiary within the enterprise which is legally registered in at least one country.

The Configuration Workbench creates at least one operating company organization as best practice. This reduces the cost of any re-implementation as a result of expansion due to acquisition or diversification within the enterprise.

Multiple Operating Companies in Multiple Countries

The preceding diagram demonstrates a multi-company enterprise operating in multiple countries. Every enterprise has at least one legal entity that is the designated legal employer for all employment related activities. In the diagram, the Vision Security operating company operates and employs people in the U.S. and Ireland. The Vision Security U.S. and the Vision Security Ireland organizations represent the designated legal entities/employers in those countries.

Multiple Operating Companies in Multiple Countries with a Consolidated Legal Entity

The preceding diagram shows an alternative configuration for a multi-national and multi-company enterprise with the addition of a consolidated legal entity. A consolidated legal entity acts on behalf of several operating companies or the enterprise, and is the legal employer in the country. Using the preceding diagram as an example, Vision Corp UK is the consolidated legal entity for Vision Corporation in the UK. For management reporting, VL UK and VS UK report to Vision Lighting, and for legal reporting, they report to Vision Corp UK.

Swapna Vitkar

Share
Tags: