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Should I mark an actual legal entity as a Legal Entity in Unanet or simply make it a Financial Organization?


Where possible, we have attempted to clarify that the lower case term "actual legal entities" is referring to real world situations, whereas "Legal Entities" (mixed case) is referring to the Unanet functionality.

All Unanet Financial Organizations must be identified as either a Legal Entity or a Subdivision of a Legal Entity.

A Financial Organization is simply an organization for which you need to track income or expenses for financial statement purposes, such as a Division, Segment or Cost Center. A Legal Entity, on the other hand, is a Financial Organization for which you must maintain a set of accounting records, meaning the Balance Sheet must balance at this organization level. In Unanet, when an organization is marked as a Legal Entity, certain systematic parameters are enforced to ensure that the Balance Sheet balances for the Legal Entity.

Identifying an Organization as a Legal Entity is achieved through the Organizations dashboard (List tab). 

Navigate to Organizations > List > List tab > Edit Pencil Icon > Financials tab.

The table below outlines considerations when setting up actual legal entities in Unanet. The options are to set them up in Unanet as Legal Entities or as Financial Organizations. 


Balancing Debits and Credits

  • Unanet requires that debits and credits balance within a Legal Entity but not within a Financial Organization. This is a strong argument for setting up legal entities in Unanet.
  • Having multiple actual legal entities set up as Financial Organizations under a single consolidated Unanet Legal Entity requires you to manually keep the books of the actual legal entities in balance.
  • Examples of intercompany transactions include:
        • Booking due to/from amounts.
        • Creating entries for the intercompany subcontract revenue/expense and intercompany receivable/payable entries.
        • Cross-charging labor and/or expense.
        • Distributions payable.

Posting Groups

Any Account Category where the Legal Entity is the only Organization Source option (e.g., AP, Retained Earnings) cannot be split between Financial Organizations. You can only choose the one Legal Entity (under which your actual legal entities are Financial Organizations, which you would not be able to differentiate between).

Therefore, each year, a manual reallocation of the Retained Earnings entries and current year net income amounts would need to be made for balance sheet purposes.

Navigate to Admin > Setup > Accounting > Posting Groups.

Cost Pool Groups
Cost pool groups cannot be shared between Legal Entities.
  • If a company wants to aggregate their cost pools and bases between the legal entities, then they cannot mark each entity as a separate Legal Entity, but rather, children Financial Organizations of a consolidated parent.
  • Note that a Journal Entry is required to record the Cost Pool Calculations.
Cross-charging between Actual Legal Entities

Cross-charging between Unanet Legal Entities requires manual journal entries. Various posts (Billing, Cost, Invoice Completion, etc.) ensure that no cross-Legal Entity transactions are created.

This could be handled via an export/import process.

Timesheet Validations

Timesheet system validations ensure that due to/due from and intercompany transactions are handled appropriately.

    • If a user's Person Organization is a financial organization, they can only charge to projects with a Project Owning Organization in the same Legal Entity hierarchy as their Person Organization.
    • If a user's Person Organization is not a financial organization (only possible with non-employees such as subcontractors), they can charge to projects with a Project Owning Organization in any Legal Entity hierarchy.

Customer/Project Organization Validations


Customers can be restricted to specific Legal Entities. If more than one Legal Entity has the same customer, that must be specified on that Customer Profile.

Navigate to Organizations > List > List tab > Edit Pencil Icon > Customer Profiles > +Customer Profile.

This Customer/Project Organization validations ensure that due to/due from and intercompany transactions are handled appropriately. Typically, intercompany transactions are recorded through Accounts Payable and Accounts Receivable.

Consolidated Financial Reporting Across Multiple Legal Entities

  • Consolidated financial reports across multiple legal entities are yet to be offered in the standard reports.
  • Consolidated financial reports can be generated by using Refreshable Web Queries.

If you require a consolidated Income Statement/Balance Sheet for multiple legal entity reporting, setting up as Financial Organizations would allow you to get these reports on all legal entities in one view via standard Unanet reports. 

  • Financial reports in Unanet can be run at the Financial Organization and legal entity levels, so this may factor into your decision to use Financial Organizations for actual legal entities.

Posting and Reporting with Multiple Legal Entities

Multiple Legal Entities will show up in the dropdown menus of Reports, Lists, and Posting screens and you MUST select the Legal Entity on every Financials screen.

A way to streamline this for Posting screens only is to use Organization Access for the Posters.

This is often the tipping point for you to decide to use Financial Organizations over marking the organization as a Legal Entity.

Organization Access

Some roles, e.g., the AP Poster role, have Organization Access options of Legal Entities only. If the actual legal entities are set up as Financial Organizations instead of Legal Entities, there will be no way to restrict access to anything other than all access.

Navigate to People > List > List tab > Edit Pencil Icon > Organization Access > Edit Pencil Icon.

1099 data

The 1099 vendor payment export is based on legal entity.

If actual legal entities are set up as Financial Organizations in Unanet, all vendor payments would need to be reviewed to compute 1099's manually for each actual legal entity.

Navigate to Organizations > List > List tab > Edit Pencil Icon > 1099 Tab.

Additional Information

KC - Financial Orgs

Help Docs - Financial Organizations

KC - FAQ - Should I set up multiple legal entities?

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