Ready to Set Up a Legal Entity in D365 Finance and Operations? Here’s How!

Setting up a legal entity in Dynamics 365 Finance and Operations (D365 F&O) is a crucial step for organizations managing multiple business units, subsidiaries, or operations across different regions. A legal entity represents an organization that has a registered business name, legal obligations, and transactions within the system.

This guide provides a step-by-step process to create a legal entity in D365 F&O, ensuring that your business is structured properly for financial reporting, transactions, and compliance.

Steps to Create a Legal Entity

1. Navigate to Legal Entities
2. Log in to Dynamics 365 Finance and Operations.

3. In the Navigation Pane, go to Modules > Organization administration > Organizations > Legal entities.

4. Click New to create a new legal entity.

5. Enter Basic Legal Entity Information

• Company Name: Enter the full legal name of the entity.
• Company ID: Assign a unique identifier (e.g., “US001”).
• Country/Region: Select the country where the legal entity is registered.
• Then click on OK.

6. General Fast-tab

• Memo: Enter general information about the company.
• Search Name: It is an alternate name for the company which can be used to search the legal entity.
• Use for Financial Consolidation process: If this legal entity is being used as a consolidation company, then set the Use for financial consolidation process Boolean to Yes. No transactions can be posted, and the company can only be used for consolidating data and reporting.
• Use for financial elimination process: It helps remove intercompany transactions during financial consolidation. When enabled, this entity records elimination entries to remove intercompany transactions from consolidated financial reports. If disabled, eliminations must be done manually or in another entity.
• Language: Choose the primary language for the entity.
• Time Zone: Set the time zone for the entity’s location.

7.  Configure Address and Contact Details

• Under the Addresses tab, click Add and enter:
  • Street, City, State, Postal Code, and Country
  • Primary address purpose (Business, Invoice, Delivery, etc.)

• Contact

Under the Contact Information tab, click Add and enter:

• Email, Phone number, or Website

9. In the Statutory Reporting section, enter the legal entity’s registration numbers required for compliance.

10. In the Registration Numbers section, fill in any necessary legal details based on the country’s requirements.

11. In the Bank Account Information section, add bank accounts and routing numbers. It’s best to manage these in the Cash and Bank Management module.

12. In the Foreign Trade and Logistics section, enter the shipping details for the company.

13. In the Number Sequences section,

• Navigate to Organization Administration > Number Sequences.
• Define number sequences for:
  • Customer & Vendor Accounts
  • Sales Orders
  • Invoices
  • Purchase Orders

14. In the Dashboard Image section, you can upload or change the company’s logo or dashboard image.

15. In the Tax Registration section, enter tax registration numbers required for reporting.

16. In the Tax 1099 section, enter 1099 details (only needed for US-based companies).

17. Finally, click Save to apply the changes.

To conclude, creating a legal entity in Dynamics 365 Finance and Operations is a foundational step for ensuring seamless business operations, compliance, and financial tracking. By following these structured steps, businesses can effectively manage multiple legal entities within the system.

If you’re new to D365 F&O or need to discuss business needs, you can reach out to us at transform@cloudfonts.com.