Whether an early-stage startup or an established firm, the primary goal for any organization is how quickly and efficiently they expand. With gradual growth, organizations tend to add more entities, which means the legal teams are put to work with numerous operations and an unimaginable amount of data to manage.
Do you know that an Entity Management platform can help you streamline all of this in one place? But before we dive deeper, let's explore more about an entity.
An entity known as a subsidiary can be a corporation, partnership, trust, etc., possessing distinguishable legal rights. An entity is created to conduct business activities or engage in trade. There are five types of entities that an organization can form:
Sole proprietorships: Simplest form of a business structure and the most preferred one where only one person is involved. The sole owner is the business operator and takes on all financial responsibility and legal liability for the company.
Partnership: There are two types, general partnership and limited partnership. A general partnership is similar to a sole proprietorship but with two or more owners. On the other hand, a limited partnership is a registered business entity where founders have personal liabilities and limited partners, for example, investors, have little to no liability or control over the business.
C Corporation: These are legal entities independent from the founders. Here, the business is liable for legal action, while the founders and owners are legally separate from the organization. C-corps face double taxation and they have to comply with many more regulations and tax laws.
S Corporation: It is a special designation for small businesses which have ‘Inc.’ in their names. Unlike C-corps, S-corps don’t have to undergo double taxation. S-corps can have only 100 shareholders which limits the growth of the entity.
Limited Liability Company: These are separate legal entities from their owners and have the liberty to choose how they are taxed. LLCs take positive features from other types of entities and resonate more with sole proprietorship and partnership.
Now that we know what an entity is, let's understand how entity management works.
Entity Management is a complex process involving many people and procedures related to each entity. Orderly management of a company's vital information and documents is necessary to keep the business streamlined. It involves a corporation's management, compliance, and legal departments that maintain incoming and outgoing information; and processes like regulatory compliance, administrative maintenance, monitoring of insider trading, and internal record-keeping.
Apart from keeping track of all the activities, entity management helps a business understand the deficiencies to comply with the governance model and overcome contemporary challenges.
But how do organizations worldwide manage multiple entities and large amounts of data? They rely on digital platforms. Entity management supported by the right technology has helped businesses manage their data efficiently and save time by eliminating repetitive tasks and minimizing errors in reporting. Automating redundant tasks gives a company ample time to focus on primary tasks.
Entity Management is needed at all stages of your business. However, as your organization grows and adds new entities, your legal team is burdened with more work, which pulls down their efficiency leading to delays and errors. To help you with entity compliance and governance, Traact brings all foreign & domestic entities into a single table, allowing your legal team to become more productive by automating most of their jobs. The entity management platform files and creates entities on your behalf; it lets you register agents in all 52 jurisdictions, BOC-3, apostille, annual filing, and initial filings are just a few clicks away.
Not only this, Traact lets you surf through entity history, take a glance at the organization chart, check for officers, find documents, and a lot many details. In addition, it is a central place for all your data stored securely on the cloud. Finally, it enables collaboration and legal data consistency between executives, lawyers, accountants, board members, outsourced firms, and investors. Are you intrigued to know more? Book a demo with us right away!