What is an entity? Definition and meaning

In the world of business and finance, an entity is an individual, company, partnership, association, club, cooperative that has a legal and separately identifiable existence. For example, if you own 100% of the shares of a commercial enterprise, even though it is your company, it is a different entity from you as far as the law and the government’s tax department are concerned.

Legal entities have the legal capacity to enter into contracts or agreements, incur and pay debts, pay taxes, assume obligations, sue and be sued in their own right, and be held responsible for their actions. Economic entities are regarded by economists as consumers.

There are two main types of entities:

  1. For profit: Their goal is to generate a profit. There are two main types – people based and capital based.
  2. Not for profit (non-profit): Their goal is to have a specific impact.

Business EntityA business entity is one that is formed and administered – according to commercial law – in order to engage in charitable work, business activities, or other permitted activities. In most cases, business entities are set up to sell a product or provide a service.

As far as regulations, taxation and liability are concerned, a subsidiary is a distinct legal entity, unlike a division, which is a business that is fully integrated within the main company.

In non-business terms, the word refers to a real thing, a being – something that exists. In order to be one all it has to do is to exist – to be. The word also signifies separateness from other things that exist – from other existences.

It is a thing that has individual, definite existence outside or within our minds – anything real in itself.

Entities are described as follows by the Cambridge Dictionary:

“Something that exists apart from other things, having its own independent existence.”

In engineering and computer programming, an entity is a unit – the term is used to identify it as such. It could be any object in the system that we want to model and store information about. This could be something abstract, such as an idea, or concrete, but it has no ready name or label.

Christopher Alexander, a widely influential architect and design theorist and emeritus professor at the University of California, Berkeley, once said: “In short, no pattern is an isolated entity. Each pattern can exist in the world only to the extent that is supported by other patterns: the larger patterns in which it is embedded, the patterns of the same size that surround it, and the smaller patterns which are embedded in it.”

In computer games it is a dynamic object such as a non-player character or item.

Anything that is as yet unnamed and we are not sure how to refer to it may be described as an entity, as in: “As I approached the top of the hill, the entity rose into the night sky, glowing brightly and making an eerie humming noise. Then it flew straight up at incredible speed and disappeared above the clouds.”

What is a financing entity?

In the world of insurance, a financing entity is any party that has direct ownership of a specific policy or certificate that is the subject of a settlement contract. He, she or it (if it is a company) has a written arrangement with at least one licensed settlement supplier for financing the acquisition of a number of settlement contracts.

In insurance, the term may refer to lenders, underwriters, placement agents, or the buyer of a policy from a settlement provider.

More generally, but still in a business/finance context, the financing entity may be the party in a financing arrangement. Financing and financed entities represent two key parties in a financing arrangement.

SuperBrokers.ca made the following comment regarding financing entities:

“The entity that has ownership of a policy or settlement contract. A financing entity can include a placement agent, a lender, an underwriter, or any other type of entity.”

The word can be traced back in the English language to the 1590s. It came from Late Latin (nominative: entitas), from ‘ens’ (genetive: entis) meaning ‘a thing’.