Managing legal entities.

In this session, we're going to take a look at the

objects around legal entities. So we'll take a look at legal addresses, legal
entities, and legislative data groups. Once a legal entity has been configured,
if it's indicated that you're going to use it as a legal employer, meaning it's
going to be used by HCM, we have to further define some values under manage legal
entity HCM information. And we'll talk a little bit about legal jurisdictions and
reporting units as well.

Let's give you a bit of definition on each of these items. So managing a legal
address, it defines the physical address that is used for your legal entity in
any reporting, so the official address. You'd go to Manage Legal Address, and you
set up that address. And then when you're setting up your legal entity, you
select that address.

We also utilize something called Manage Legislative Data Group. If you're using
the Enterprise Structure Configurator to initially load your legal entities, it
will create an LDG for every country that you have a legal entity associated
with. If you're not using the ESC, then you can go and create an LDG. It's really
just the description, the country, the currency, and if you're integrating with
ERP, the cost allocation structure.

And then we have a legal entity. So a legal entity is shared across Fusion
applications. If you're implementing HCM and Financials and supply chain and so
on, it tends to be configured by finance.

So this represents the legal employer and payroll statutory unit. When you set up
a legal entity, if it's going to be used in HCM, it has to be at least a legal
employer. So there's a checkbox for that.

And if it's also going to be a payroll statutory unit, there's a checkbox for
that as well. A PSU or payroll statutory unit is a legal entity that's
responsible for payment of its employees, and it can be used for reporting tax
and social insurance. So we see those values here.

We talk a little bit about them, but there are several additional areas or
sections on manage legal entity HCM information that is utilized with payroll. So
if you're going on to the Global Payroll training, whether it's the US training,
I believe we have one for Canada. And I think we're getting one created for
Mexico as well. So you'll see some additional information about a payroll
statutory unit in that training.

And then we have manage legal entity HCM information. If when you're setting up
the legal entity you turn on that it's a legal employer, you have to come to this
object and define some additional information from an HCM perspective. And then
just a little information about legal jurisdictions, manage physical territory
such as a country, state, county, or locality. So here it gives you some US
examples. And again, we'll see more of that if you go to the payroll training.

And then legal reporting units automatically created when you create a legal
entity and identify the legal entity as a legal employer. The legal reporting
unit is used with a calculation card. So again, it's used by payroll. It's where
you store your experience and unemployment and disability insurance.

So now that we've given you a brief definition of each of these objects that are
utilized with legal entities, let's go take a look at them in a bit more detail.
Starting with manage legal address, the legal address is the mailing address of
the legal entity and legal authority, So a legal address is also the address that
a legal entity uses to register with that legal authority. You can use legal
addresses to send correspondence such as invoices, bills, reports, and so on.
So let's go show you where you can configure that. Since this is shared-- legal
entity is shared between the different Fusion products-- we're going to find it
in Setup and Maintenance. Once we're here, I'm going to go ahead and select
Workforce Deployment. And then I'm going to select Legal Structures.

And if you go ahead and look at the list, we can see legal address, followed by
legal entity, followed by legal entity HCM information. So those are the objects
I'm going to be looking at here. You'll look more at other ones, again, going on
to payroll.

So if we just select Manage legal address-- and you'll have a hands-on activity
for this. This will be the first one you have within the series of training. So
you would simply just click Create. It's just going to give you a pop up to
define your address. So maybe I'm going to enter an address line 1625, Wrightwood
Avenue.

And then I'm going to come down to postal code, and I'm going to pop in 60614.
And what's happening now is it's looking at the geography table. So I'll select
one of these values. And then I'm going to simply go ahead and click OK.

And you could see now I've created that legal address. And then I would do a Save
and Close. And then you could tie it when you're creating your legal entity.
Remember, it's going to be the address that's going to be assigned to different
tax forms and correspondence.

Reviewing the legal entity role in configuration. So your enterprise structure in

Oracle Cloud applications, the contracting party of any transaction is always the
legal entity. So when you look at some definitions here-- owns assets of the
enterprise, record sales and pays taxes, makes purchases, incurs expenses,
performs other transactions, when you look at many of those things, those are
reasons why you have legal entities in finance right-- owns the assets. So you
have to track that information-- records sales, makes purchases.

When we look at how it performs in other transactions, so from an HCM

perspective, we need to pay people. You're paying your employees out of a legal
employer. They get their year-end tax forms which indicates the legal employer in
which they're being paid.

If we look at legal entity relationship with a worker assignment, when you add
somebody into the system, whether you're hiring an employee, a contingent worker,
or a pending worker, a nonworker, one of the very first fields you're going to be
presented with is, what legal employer are you associating this person with? I'm
an employee with Oracle USA or I'm a contingent worker. So I'm a temporary
contractor doing work for Oracle USA or I'm a nonworker, maybe I'm a volunteer at
the cafeteria for Oracle USA, and so on.

A legal employer is a legal entity that employs workers. You define the legal
entity as a legal employer in the Oracle HCM Cloud legal entity configurator. So
it's really just when you go to Manage Legal Entity, if you turn on the checkbox
for legal employer, you can utilize it in HCM.

It is mandatory to enter a legal employer for workers. It's one of the very first
fields we see. It's basically effective date action and then what is the legal
employer. And it's for any type of worker that you add. And it sets all kinds of
things in the application-- name formatting, address formatting, which
localization fields are going to display for which people, that kind of stuff.

Giving you additional information about legal entities and payroll reporting,
legal entities are required to pay payroll taxes and social insurance, such as
Social Security on your payroll. It is possible to register payroll statutory
units to pay and report on payroll taxes and social insurance on behalf of
multiple legal entities. You associate a legislative data group with a payroll
statutory unit to provide correct payroll information. So again, if you go on to
payroll training, you'll see some of that additional information on this stuff.

But let's go ahead and show you a legal entity. So once I've defined my legal
address, I can go create a legal entity. Now what you're going to notice in my
environment is there's this field called Scope. If you do the hands-on
activities, once you set up a legal entity, it will ask you to define a scope.
And really what it is is just saving you time.

So if I've created 20 infusion finance, why should I have to search for it again
when I have to look at it under legal entity registration or again under legal
entity HCM? So it really just saves you time. It brings you automatically into
that legal entity. So this is what I'm talking about in the recorded activity
demos when I'm addressing scope.

So let's go ahead and select Manage Legal Entity. And I'm going to say I want to
create new. And then I'm going to Apply and Go to Task. And then I'll do a Create
here.

And then it's asking for the country. And depending upon the country you select,
the descriptors will change. So certainly, if you're watching this, but you're
someone who's learning about HCM Cloud and you're implementing in India or France
or Australia, if you go into the environment and you change the country, you
could see how the descriptors change.

So I'm just going to call this OU Oracle USA Inc. And then I'm going to enter the
legal entity identifier. And then the start date, you could leave that blank. And
if you do, it's going to default to January 1 of 0001.

So if you don't want that here, you can put in the day the company was founded or
at least older than your most tenured employee. So maybe here, we'll put in 1,
15, 1975. And then, is it going to be a legal employer? So by turning on legal
employer, then you could use it in HCM.

If you turn that on, do you want to tie it to a different legal employer for
payroll purposes? Or do you want it to be its own payroll statutory unit? Then we
would go ahead and select our legal address. So I'm going to go ahead and search
for my address. So we put in 625.

And then you have your legal entity identifier. So this is what these numbers
would be on the tax forms issued by the localization. So I'm just going to enter
some numbers in there. So maybe our EIN is going to start with 22.

And obviously, you're going to get these numbers off of the official documents
that you receive from the different agencies. I'm not proficient with what all
these numbers are going to be. Then I'm going to do a Save and Close.

And because I've turned those checkboxes on, I can further define it in HCM. If I
didn't turn on legal employer, I wouldn't do any additional steps in HCM. I might
be using it in defining additional information in finance, but not in HCM.

So legal reporting unit. A legal reporting unit is the lowest level component of
a legal structure that requires registration. It's used for grouping workers for
the purpose of tax and social insurance, represents part of the enterprise with a
specific statutory and tax reporting obligation. So again, going on to payroll,
you'll see more information on this.

And reviewing some information about legal reporting units. So when a legal
entity is first created-- so I just created the OU Oracle USA-- the Oracle HCM
Cloud legal entity configurator automatically creates legal reporting unit for
the legal entity with the registration. You can define legal reporting units by
physical location, logical units. So I just created a legal entity. It
automatically created a corresponding legal reporting unit.

If I go back into the system, and it brought me back out to my task list. And
you'll notice that the scope didn't change. But what if I wanted to change that
scope? So I'm going to come up here, and I'm going to say, Select. And then in
the legal entity, I'm going to say Select and Add, and then Apply and Go to Task.

And then I'm going to look for My Oracle. Let's see. There it is. And then I'm
going to have to scroll all the way down to the bottom here to get to the Save
and Close. And you could now see that my scope has been set.

So one of the things that I was talking about was manage legal reporting unit.
And you'll see here that I've got my legal entity. Do I want to select an Add? Do
I want to create a new one if I needed to create another one? Once we've defined
the legal entity and we've said that it's a legal employer, we need to go and
further define it on manage legal entity HCM information.

However, before you do that, you do need to define a legislative data group. If
you used the ESC, it would have automatically created one for each country in
which you defined a legal entity. I'm not going to create one from scratch. I'm
just going to show you one that we've created in the US.

So I'm just going to end my search here, put in Manage Legislative, and then I'm
going to go to Manage Legislative Data Groups. I'm going to go ahead and select
it. And then country I'll select United States.

And then I'm just going to select Search. And I'm going to bring up this one. And
it's pretty straightforward. It's basically when you're creating it, you're
indicating the name, the country, the currency, and the cost allocation
structure, so if you're linking that to financials.

Once it's been created, you can update anything but the cost allocation
structure. So make sure that you're working with your finance folks on that if
you're going to be utilizing that feature. So a little bit more on that.

Legislative data group is a country specific data partition within the

enterprise. You saw there were only four fields on it. But when you go and you
create things, they are linked to an LDG. So, for example, elements-- so earning
elements, deduction elements, tax elements-- you cannot share those between
countries.

So if you just think about regular, that might appear on your paycheck. We can't
share regular between US and Canada. They have to both have their own version--
one for US, one for Canada, one for UK because everybody's taxed differently.

There are many things that have to do with compensation that are tied to LDG.
Absence plans, we can't share absence plans between countries because if we pay
out your absences, that's tied to an element. Salary basis, which is how we track
your base pay is tied to an element that might be on your calculation card. So
it's a country-specific data partition, supports the configuration of objects
with a strong legislative context, such as payroll, absence elements, rates of
pay. So do not span the enterprise.
Your person number can span the enterprise. There are a lot of other work
structures that you can choose to restrict them by business unit or span the
enterprise. But for anything keyed by legislative data group, that is not shared.
Here are just some examples. So we have these different legislative data groups
for each of the countries that we have listed in our particular diagram.

Legal jurisdictions and authorities. A legal jurisdiction is a physical

territory, such as a group of countries, single country, state, county, parish,
or city where it comes under the purview of a legal authority. And then we have
legal authority is a government or legal body that has the powers to make laws,
levy and collect taxes, remit financial appropriations.

So, again, you may see more of these when you go into payroll. So we're going to
leave this here for now. In the second part of our discussion, we'll come back
and we'll pick up at managing legal entity HCM information.