A special purpose entity is a legal entity created to fulfill narrow, specific or temporary objectives. These special purpose entities can be formed through limited partnerships, trusts, corporations, limited liability corporations or other entities. A special purpose entity can be in the form of a subsidiary company with an asset/liability structure and legal status that makes its obligations secure even if the parent company is affected or goes bankrupt. Generally, these types of special purpose entities are used by companies seeking to obtain financing for a single large project or asset. They enhance the ability of the project to get financed by giving the lender or investor greater comfort that the primary asset or project will be shielded from events that may affect the parent company. This type of business entity can help you through many different challenges while protecting your original business entity. Additionally, the tax benefits associated with this type of entity make it a must for many businesses.

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