A legal entity is a business that exists in its own right under the law, such as a corporation, partnership or LLC. It can sign contracts, hold bank accounts and owe tax. An LLC is a structure allowed by state statute. The IRS treats a single-member LLC as disregarded from its owner for income tax by default, and a multi-member LLC as a partnership, unless it elects otherwise on Form 8832. The IRS says a business entity should have only one EIN. Stripe ties each account to the tax ID and legal entity of one business, so separate entities need separate Stripe accounts.
What is a legal entity?
It is the business as the law sees it. The entity signs leases and customer agreements, opens bank and processing accounts, files tax returns and is liable for its debts. Common US structures are sole proprietorships, partnerships, corporations, S corporations and limited liability companies. The IRS notes that an LLC "is a business structure allowed by state statute," so the rules for forming one come from the state.
Is a location the same as an entity?
No. A location is a place where the business operates. One entity can run many locations. A group can also form a separate entity, often an LLC, for each location. Which way to go is a legal and tax decision for your attorney and CPA. It changes how many bank accounts, processing accounts and sets of books you run.
How does the IRS treat an LLC?
By default, for federal income tax:
| LLC | Default classification |
|---|---|
| One member | Disregarded as separate from its owner |
| Two or more members | Partnership |
A single-member LLC is still treated as a separate entity for employment tax and certain excise taxes. Either kind can file Form 8832 to elect to be treated as a corporation. The IRS says the election can't take effect more than 75 days before it is filed or more than 12 months after.
Does each entity need its own EIN?
An EIN is a federal tax ID for businesses and other entities. The IRS lists LLCs, partnerships and corporations among the entities that need one to operate. It also says "a business entity should have only one EIN." In general, a change of ownership or structure needs a new EIN, while a change of name or address doesn't.
Why does the entity decide your Stripe accounts?
Stripe says each account can be associated with "the tax ID and legal entity of one business." If you run businesses with separate tax IDs, such as separate legal entities, you must create a separate account for each. Stripe lists other reasons for separate accounts too: each one has its own public business information and statement descriptor, its own reports, and can pay out to its own bank account.
The reverse also holds. Several locations under one entity can use one Stripe account, or several accounts with the same tax ID. Stripe also offers organizations for central reporting across accounts that belong to the same business.
What else follows the entity?
- Bank accounts. Each entity's money goes into accounts in its own name.
- Books. Each entity keeps its own set of books and its own chart of accounts.
- Money between entities. A payment that lands in the wrong entity, or a shared cost one entity pays for the others, becomes an intercompany transaction.
- Reporting the group. Seeing all entities together is multi-entity accounting.
What changes when a location becomes its own entity?
It needs its own EIN, bank account, processing account and books before it takes a payment in its own name. Customer agreements should name the entity that delivers the service, so the money and the record land in the same place.
General information, not legal or tax advice.
- IRS: Business structures
- IRS: Limited liability company (LLC)
- IRS: Employer identification number
- Stripe: Multiple separate accounts
Every figure on this page was checked against these sources on Oct 6, 2026. General information, not legal or tax advice.