Entity management describes the process an organization uses to manage critical corporate records and legal compliance documents. While you might not be aware of its significance, the presence of an effective, convenient, and organized legal entity management system is more important than ever.
Because the internet increases organizations’ ability to expand, business entities, such as partnerships, trusts, and corporations, need to understand where all of their legal compliance documents exist without running into administrative bottlenecks.
In this article, we’re discussing the details of what is entity management and how a streamlined system can reduce costs, boost efficiency, and accelerate your organization’s growth. Though many organizations believe they can afford to cut corners with their legal entity management system, this article explains why corporate governance services (including entity management) are the best way to protect your organization from a rapidly changing business environment.
What Is Entity Management?
Entity management simply refers to the process a company uses to manage its vital information and sensitive documents. Using this system, companies can maintain an orderly system that tracks all of a company’s business entities.
Corporations, partnerships, trusts, and other forms of legal subsidiaries have responsibilities to their owners, governments, and other stakeholders. Entity management gives these organizations the resources to fulfill their responsibilities more efficiently.
Corporate governance responsibilities might include some of the following tasks:
- Tracking legal dates and reminders.
- Filing annual returns with the government.
- Logging shareholders’, directors’, and officers’ information in an organized manner.
- Drafting documents, such as by-laws and resolutions for ownership structures.
- Creating ownership charts.
- Updating capitalization tables.
In essence, entity management refers to a company’s governance, compliance, and legal departments. The majority of these responsibilities come down to regulatory compliance, administrative duties, and the monitoring of reports and corporate records.
What Makes a Good Legal Entity Management System?
An effective legal entity management system accomplishes the following objectives:
- It manages your company’s compliance, ensuring it remains compliant with international, federal, state, and local reporting requirements.
- Simplifies data, documents, communication, and collaboration management across all of your organization’s various business entities.
- It gives your organization easy access to all of your entities’ records and ensures the security of those corporate records.
Today, more and more companies have to prepare for international compliance. Keeping all of their entities on the same page is exceptionally challenging. Because of the overwhelming number of documents companies generate as they grow, legal entity management and compliance can place significant strain on company resources. With numerous jurisdictional reporting requirements that expand as your business grows, tracking becomes increasingly difficult.
That’s why more and more companies are turning to outsourced legal entity management partners. If companies choose the right partner, they don’t have to question their systems because they have a trusted team of professionals focused solely on maintaining an effective legal entity management system.
What Does Entity Data Typically Include?
Entity data consists of various records where entities are registered to conduct business, lists of officers and directors, and ownership structures. The amount of data included in an entity management system makes it essential for companies to have a centralized, secured location for compliance data. Organizing these records in an easily-accessible, digital format keeps your organization safe from both a disaster recovery and data sovereignty standpoint. Your entity’s data is extremely sensitive and you need a dependable solution. Entity management software provides that solution.
Legal Entity Governance Software
Spreadsheets, folders, and Excel now inhibit companies from streamlining their legal entity management systems. Because of the complexity of legal compliance data, most organizations are implementing dedicated entity management software to replace manual methods of entity compliance.
Entity management software provides several benefits, including the following:
- Legal operations
- Teamwork and collaboration from centralizing information
- Single source of truth on an organization-wide basis.
- Simplified Risk and compliance management.
Effective entity management software lets your legal departments work more efficiently and govern your frameworks. Your compliance data doesn’t have to be complex if you know exactly where all of the required information lives.
Why Does Entity Management Matter?
Despite the emerging complexities of entity management, some organizations still question whether they need a formalized system. However, if organizations are serious about compliance and security not hindering their growth, they need to implement an entity management system that works.
Entity management systems are important in today’s business environment because:
- Digital regulatory compliance is increasingly complex.
- International, state, and county local filing requirements are complex.
- Data access and security are more important than ever.
Regulation plays a large role in your company’s need for an effective legal entity management system. Because of the internet, your organization has the ability to expand on a global scale never seen before. However, with the ability to expand comes more government protocol.
You should have a general counsel who understands how to unify all of your departments, such as tax, finance teams, and treasury teams. All of your teams need easy access to information, and an entity management software platform is the easiest way to foster this collaboration.
What Are the Benefits of Outsourcing Entity Management?
There are numerous benefits to outsourcing entity management. One of the most notable advantages you will receive from outsourcing your entity management system is that you will be able to develop a storage, compliance, and notification system.
Outsourcing your entity management system ensures your organization has the latest entity management software and experts who understand that software. You will have an entire team dedicated to giving access to the correct parties while maintaining firm security protocols. Outsourced entity management companies use entity management software systems that keep costs low while automating some of the more tedious aspects of compliance and removing human errors.
Having one team conduct all of these actions is preferable to coordinating multiple legal departments. While investing in your outsourced legal entity management system takes time, it is the best way to achieve savings and provide timely compliance without having to hire an in-house staff for management.
Entity Management FAQs
What Does the Entity of a Company Mean?
The term “business entity” simply describes an organization created by an individual (or individuals) to coordinate, conduct, or engage in business activities. Businesses can engage in trades or partake in similar activities. There are several types of business entities, including sole proprietorships, partnerships, LLCs, and corporations.
What Is the Difference Between an Entity and a Business?
The difference between an entity and a business is that an entity is less concrete. It refers to individual units of ownership rather than an actual physical form. Businesses, on the other hand, are composed of individuals who have a common purpose.
Conclusion- What Is Entity Management and How Can It Help Businesses?
Entity management is a critical component to any organization looking to expand during the digital age. As compliance becomes more challenging to navigate and companies have increased capabilities to expand, they need a solution that simplifies all of their compliance issues.
At Fully Accountable, our corporate services offerings ensure your entity (whether it’s a trust, corporation, partnership, or any other entity) has access to a full-service team of professionals committed to simplifying your business processes and maximizing your growth potential. You no longer have to worry about locating various compliance documents, ensuring departments are on the same page, or hiring an in-house team as you scale. We’re here for all of your corporate services and entity management needs.
Contact us today to see what Fully Accountable can do for your business.
