legal entity-An association, corporation, partnership, proprietorship, trust, or individual that has legal standing in the eyes of law. A legal entity has legal capacity to enter into agreements or contracts, assume obligations, incur and pay debts, sue and be sued in its own right, and to be held responsible for its actions. Legal entity used in a sentence: You should always make sure you know what is the real legal entity and give way to them and what they say. Financial Identification-Your form of business determines which form of financial identification to establish such as Sole Proprietorships, Partnerships, Corporations, S Corporations, or Limited Liability Company (LLC). Then an Employer ID Number (EIN)is issued. In the United States a Social Security number is also used when a business is registered as ¨doing business as¨, or in other countries anything a country issues as a form of ID.