FormData
takes a form element in its constructor not a jQuery object - var formData = new FormData(this);
You have set some options for jQuery ajax to handle the formdata object so you should use $.ajax instead of $.post, also pass the formdata itself as the data.
$.ajax({
url: "create_entity.php",
data: formData,
processData: false,
contentType: false,
type: 'POST',
success: function(data) {
var response = jQuery.parseJSON(data);
if(response.code == "success") {
alert("Success!");
} else if(response.code == "failure") {
alert(response.err);
}
}
});