The term “separate legal entity” is a fundamental concept in law that underlies business law and legal liability.
Not getting it right means that you could:
- sign contracts which make you personally liable on the contract, when you don’t intend to
- sign a contract with a non-existent legal entity, and make the contract unenforceable
- sign a contract with the wrong company within a group of companies
- sign a contract as the company, when you intend to sign as a shareholder.
And it’s all avoidable.