What is a legal entity?

We are required to capture information that clearly defines the organization that is accepting payments. A legal entity is a corporation, limited liability company, partnership, sole proprietorship, and any other similar business entity formed in the United States or a foreign country.

To comply with the mandate, financial institutions, and credit card processors, like Securely, are tasked with having a Customer Identification Program (CIP) in place that contains measures to verify the identities of anyone looking to open an account and provides this information to government authorities. Someone in an organization must be responsible, just as someone in each business has the authority to sign official checks and perform other banking duties. Without such a program in place, there would be no way to have effective oversight of money-laundering, drug trafficking, or potential acts of terrorism from receiving or transferring funds between bank accounts.

Securely works with our payment processing partners to move money to your bank account during the payments process (known as the Acquiring Bank). Our process then collects money from the cardholder’s issuing bank such as Wells Fargo or Citibank to reimburse them for advancing money to merchants like yourself. Our banking partners require Securely (and all other credit card processors) to obtain this information as part of the underwriting process.

In addition to using this information to identify the organization, each Merchant Processor will also receive a Form 1099-K each year for tax purposes. It is incredibly important that you properly identify the organization accepting payments so that the 1099-K is filed on the correct organization.