Legal Entity

Legal Entity means:
a person or organization that has the legal standing to enter into a contract and may be sued for failure to perform as agreed in the contract. Generally, corporations, joint-stock companies and limited liability companies are regarded for tax purposes as having an existence separate from that of their shareholders. A child under legal age is not a legal entity. Conversely, for tax purposes a partnership is often not regarded as a separate legal entity, its profits being taxed in the hands of the individual partners. A corporation is a legal entity since it is a person in the eyes of the law. What constitutes a legal entity for tax purposes may or may not coincide with what constitutes a legal entity for general law purposes. A legal entity may be expected to have a taxpayer identification number (TIN) or employer identification number (EIN) and to file the required tax returns. See entity.