---
title: "Legal entity"
description: "What is a legal entity? A company the law treats as separate from its owners, with its own contracts, assets, debts and tax. Learn why it matters in an ERP."
url: https://1flux.ai/glossary/legal-entity
last_updated: 2026-10-10
---

[ERP and platform](https://1flux.ai/glossary#erp-and-platform)

# Legal entity

What is a legal entity, and why does it decide how many sets of books you keep?

Glossary Updated 10 October 2026

Definition

A legal entity is a company or other organisation that the law recognises as separate from its owners, able to sign contracts, own assets, owe debts and be taxed in its own name.

## What is a legal entity in an ERP?

In accounting and ERP, each legal entity keeps its own books, registrations and tax filings. A branch registered under the parent’s licence may not be a separate legal entity, while a subsidiary always is. Getting this right decides how many sets of books, tax registrations and document number series you need.

Example: a family group runs a mainland company in Dubai, a free-zone company in Jebel Ali and a company in Riyadh: three legal entities, three sets of books and two currencies.

Brands and trade names aren’t legal entities. A system that holds several of them is [multi-entity](https://1flux.ai/glossary/multi-entity), and each one keeps its books in its own [functional currency](https://1flux.ai/glossary/functional-currency).

In 1flux

Each legal entity in a 1flux workspace has its own country pack, base currency, registrations, letterhead, numbering for POs, invoices and other ERP documents, warehouses and books. Entities can be set up in the UAE, Saudi Arabia and India. [See multi-company and multi-entity](https://1flux.ai/platform/multi-entity)

Related

## Keep exploring

### [Multi-entity](https://1flux.ai/glossary/multi-entity)

One system running several legal companies, each with its own books.

### [Functional currency](https://1flux.ai/glossary/functional-currency)

The currency a company's books are kept in.

### [Commercial registration](https://1flux.ai/glossary/commercial-registration)

The record that registers a business to trade in Saudi Arabia.

### [Multi-company and multi-entity](https://1flux.ai/platform/multi-entity)

Several legal entities in one workspace, each with its own registrations, currency and books.

Last updated 10 October 2026