Legal Entities for the US

A legal entity is an entity unequivocally identified and given rights and responsibilities under commercial law, through registration with the territory's appropriate authority.

A legal entity can legally:

Own property
Trade
Repay debt
Account for themselves to company regulators, taxation authorities, and owners according to rules specified in the relevant legislation (as performed through balance sheets, income statements, specified reports, and so on)

The judicial system may enforce its rights and responsibilities.

For your enterprise, a legal entity may help you with:

Facilitating local compliance
Minimizing your tax liability
Preparing for acquisitions or disposals of parts of the enterprise
Isolating one area of the business from risks in another area

For example, your enterprise develops property and also leases properties. You could operate the property development business as a separate legal entity to limit risk to your leasing business.

There are no predefined legal entities. You must create all legal entities that apply to the enterprise you're setting up. Use the Legal Entity HCM Information task from your implementation project.

There are several things you need to consider when you define your legal entities.

What roles will they play
What types of legal entities do you need
What registrations will they require
Does your organization support any retirees
How to configure them for your HR reports

Roles of Legal Entities

In configuring your enterprise structure, the contracting party on any transaction is always the legal entity. Individual legal entities:

Own the assets of the enterprise
Record sales and pay taxes on those sales
Make purchases and incur expenses
Perform other transactions

Legal entities must comply with the regulations of their registering jurisdictions.

For example, US companies can register in one state and do business in others states.

To support local reporting requirements, you create and register legal reporting units (LRUs) within a legal entity.

You're required to publish specific and periodic disclosures of your legal entities' operations based on the different jurisdictions' requirements. Certain annual or more frequent accounting reports are referred to as statutory or external reporting. You must file these reports with the specified national and regulatory authorities.

For example, your publicly owned entities (corporations) are required to file quarterly and annual reports, as well as other periodic reports, with the Securities and Exchange Commission (SEC), which enforces statutory reporting requirements for public corporations. Individual entities privately held or held by public companies don't have to file separately.

Disclosure requirements are diverse. For example, your local entities may have to file locally to comply with local regulations in US dollars, as well as being included in your enterprise's reporting requirements in different currency.

A legal entity can represent all or part of your enterprise's management framework.

Types of Legal Entities

There are two types of legal entities.

This kind	Does this
Legal employer	A legal entity that employs workers.
Payroll statutory unit (PSU)	A legal entity responsible for paying workers, including the payment of payroll tax and social insurance. A PSU can pay and report on payroll tax and social insurance on behalf of one or many legal entities. That choice depends on the structure of your enterprise.

When defining a legal entity, consider how you're going to use it.

If you're using the legal entity in an HCM context:
1. Designate one legal employer as a PSU.
2. Assign all other legal employers to that PSU for payroll processing and tax reporting.
You must assign all workers to a legal employer.
If you're using it in a payroll context, designate it as a PSU for payroll processing and tax reporting.

Limit your organization to one PSU for employees and one for retirees. This helps you:
- Control how the payroll process calculates limit taxes.
- Control overtime calculations between multiple TRUs.
  
  For further info, see Oracle Cloud Human Capital Management for the United States: Overtime Rate Configuration Guide (1600746.1) on My Oracle Support.
- Track deferred compensation contribution limits.
  
  For further info, see Contribution Limits for Deferred Compensation Plans in the Help Center.
- Issue pension payments to retirees.
  
  For further info, see Oracle Cloud Human Capital Management for the United States: Payroll and HR Implementation and Use for Retirees (2461709.1) on My Oracle Support.
You can define a legal entity that's both a legal employer and a PSU.
To group multiple legal employers together for tax reporting purposes, assign them to the same parent PSU.

There are no predefined legal entities. You must create all legal entities that apply to your enterprise.

Registrations

When you create a legal entity, it automatically establishes a registration with the identifying jurisdiction. For each employer, create a registration for the United States Federal Tax jurisdiction and specify its federal employer identification number (EIN). If the legal entity has an LRU that interacts with other legal authorities, create additional registrations as appropriate.

Note:

Capture the employer federal EIN, registered name, and state EIN details using the Legal Reporting Unit Registrations task.

If you don't define the United States Federal Tax registration, some payroll processes may not function properly, such as Archive Periodic Payroll Results and HR and Affordable Care Act reports.

US organizations use these identifiers.

Identifier	Task	Field name	Description	Used by
Legal entity identifier	Legal Reporting Unit Registrations	Legal Entity Registration Code	Associates a registration number with a legal entity.	New Hire Report Payroll processing Many other HR and Payroll reports
Federal EIN	Legal Entity HCM Information Legal Reporting Unit Registrations	Registration Number	Associates a federal EIN with a legal employer.	New Hire Report Payroll processing Tax Withholding card Many other HR and Payroll reports
Legal reporting unit registration number	Legal Jurisdictions	Legal Reporting Unit Registration Code	Associates an EIN with a federal or local jurisdiction.	New Hire Report Payroll processing
Statutory registered name	Legal Reporting Unit Registrations	Registered Name	Identifies the employer registered statutory name.	HR and Payroll reports

Configuration for Retirees

If your organization includes retirees:

Define separate PSUs for employees and retirees. Do not assign both employees and retirees to the same PSUs or to the same legal employers.
Designate these PSUs with the 2-Tier - Multiple Assignment employment model.
When you set up a tax reporting unit (TRU) for a retiree, specify the distribution code that it. Set up a separate TRU for each distribution code you require. You also must identify a Client Identifier for 1099-R if you're using ADP to process taxes.

Additional Reporting Info

When defining a legal entity, use the Legal Entity HCM Information task from your implementation project. Provide additional info required for HR reporting.

For example, you can group legal employers to include their consolidated headcounts as a single entry on the EEO report.

Use this task to provide the required info for the following reports.

Report name	How you use it
EEO-1	Used for employee reporting. Use the Legal Reporting Unit task to assign a default TRU to a legal employer Use the Legal Reporting Unit HCM Information task to specify the establishment employer type as single or multiple Use the Locations task to group locations for reporting purposes Use the Legal Reporting Unit HCM Information task to define the headquarters, company name, and company number for the TRU Use the Legal Reporting Unit HCM Information task to identify legal employers as either parents or children for grouping purposes Use the Legal Reporting Unit HCM Information task to identify the reporting establishment as payroll or nonpayroll Use the Legal Entity HCM Information task and while on the Edit Legal Entity page, click the Federal link, then choose the assignment categories to exclude from the EEO-1 report, if any For further info, see Equal Employment Opportunity Reporting in the Help Center.
VETS-4212	Used for veterans reporting. Use the Legal Reporting Unit task to assign a default TRU to a legal employer Use the Locations task to group locations for reporting purposes Use the Legal Reporting Unit HCM Information task to identify the establishment employer type as single or multiple Use the Legal Reporting Unit HCM Information task to define headquarters, company name, employment category, and company number Use the Legal Reporting Unit HCM Information task to identify legal employers as either parents or children for grouping purposes For further info, see Veterans' Employment and Training Service Reporting in the Help Center.
New Hire reporting	Use the Legal Reporting Unit task to assign a default TRU to a legal employer For further info, see Single and Multiple Employers for New Hire State Reporting in the Help Portal.

Report name

How you use it

EEO-1

Used for employee reporting.

Use the Legal Reporting Unit task to assign a default TRU to a legal employer
Use the Legal Reporting Unit HCM Information task to specify the establishment employer type as single or multiple
Use the Locations task to group locations for reporting purposes
Use the Legal Reporting Unit HCM Information task to define the headquarters, company name, and company number for the TRU
Use the Legal Reporting Unit HCM Information task to identify legal employers as either parents or children for grouping purposes
Use the Legal Reporting Unit HCM Information task to identify the reporting establishment as payroll or nonpayroll
Use the Legal Entity HCM Information task and while on the Edit Legal Entity page, click the Federal link, then choose the assignment categories to exclude from the EEO-1 report, if any

For further info, see Equal Employment Opportunity Reporting in the Help Center.

VETS-4212

Used for veterans reporting.

Use the Legal Reporting Unit task to assign a default TRU to a legal employer
Use the Locations task to group locations for reporting purposes
Use the Legal Reporting Unit HCM Information task to identify the establishment employer type as single or multiple
Use the Legal Reporting Unit HCM Information task to define headquarters, company name, employment category, and company number
Use the Legal Reporting Unit HCM Information task to identify legal employers as either parents or children for grouping purposes

For further info, see Veterans' Employment and Training Service Reporting in the Help Center.

New Hire reporting

Use the Legal Reporting Unit task to assign a default TRU to a legal employer

For further info, see Single and Multiple Employers for New Hire State Reporting in the Help Portal.

If the legal entity is also a PSU, specify:

Fiscal year start
Any additional info to support electronic year-end filings

These settings apply to all LRUs attached to the PSU.