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You are here: Home / Articles / Dictionary / Legal to English Dictionary: Entity

Legal to English Dictionary: Entity

Legal

Entity is defined as “an organization that has a legal identity apart from its members.”

English

An entity is what most people think of when they think of a business. Because it has an identity of its own, an entity can do most of the things a person can do. An entity can:

  • make agreements and sign contracts
  • be in partnership with another entity or an individual
  • lend and borrow money
  • own, sell, lease, and mortgage property
  • sue and be sued

In the eyes of the law, an entity is a person.

Forming an entity for your business gives your idea an identity separate from the founders. Because it has its own identity, entities will take on a life of their own and begin to grow. You can nurture and invest in your business, but eventually your business will stand on its own.

It is presumed that a business has an identity separate from its owners. It is important, however, to make sure an entity is completely separated from the owners. To do this, owners must keep their assets separate from the assets of the entity. The entity should have its own bank account. Personal expenses should be paid by the owners themselves and not the entity. Business expenses should be paid by the entity (or the owners should be properly reimbursed). Entities offer many protections to the owners, but an entity must be treated as separate from those members to make sure those protections hold up when they matter most. If the owners fail to treat an entity as having a separate identity, it is possible that the entity may not be treated as separate by courts and creditors.

Helping You Sleep at Night Knowing Your Business is Protected. Legally.

Even if you have been in business for years and everything has been fine. It can all change. Fast. And you could lose it all. If you don’t know how to protect yourself.

After working with entrepreneurs for years, I realized that many entrepreneurs have the same legal questions. And the same problems. Many entrepreneurs, though they understand that legal is an important part of protecting your business, just put it off. You always think you can do it later. Until there isn’t a later.

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About Josh

I am a business lawyer who helps small business owners and entrepreneurs develop a clear legal plan to protect their business as it grows. I podcast, blog, and spend my time giving entrepreneurs a clear path to legal protection. Growing your business can only happen if you have a firm foundation.

If you want to know more about how to build a business while laying your legal foundation of protection, you are in the right place. Read More…

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