Is It Necessary To Include Your Company Applicant When Filing My BOI Report?

Including Company Applicants In Your BOI Report: What You Need To Know

In 2021, the Corporate Transparency Act (CTA) was signed into law requiring companies registered in the United States to provide beneficial ownership information (BOI). This new law came into effect on January 1, 2024, and will be enforced by the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

The purpose of the BOI rule is to slow down money laundering, tax evasion, terrorist financing, and other illegal activities. These criminal activities are often made easier through using corporations and LLCs as identities of beneficial owners have not been required up until this point. Starting in 2024, hiding behind a business entity will be harder to do.

That said, because of this effort to combat illegal activity, nearly everyone with a US business will be required to report their beneficial owners, which can induce a lot of concerns and questions.

Who Needs To Comply? Unpacking BOI Reporting Requirements

The most common question is who is required to report beneficial owner information. Most simply, the answer is nearly every registered US business entity or “reporting company” with very few exceptions. Reporting companies are corporations, LLCs, or any company that filed with the secretary of state, Indian Tribe, or similar offices. The rule also applies to foreign reporting companies registered to do business within the US.

23 exemptions apply to companies that were most likely already reporting their beneficial owners before the rule. These exemptions include financial institutions, governmental authorities, investment companies, insurance companies, public utilities, accounting firms, and a few others. It is very unlikely these exemptions would impact any small businesses, startups, or other LLCs and corporations.

Essential Reporting Details For Compliance: What You Need To Know

Initially, the Financial Crimes Enforcement Network requires information about both the reporting company and the beneficial owners. Once the initial report, you will need to provide updated information as needed. The information reporting companies must provide includes:

Reporting Company’s legal name
Any “doing business as” names
The street address or principal place of business OR
The street address of the primary location of the business
The state, tribe, or foreign jurisdiction where the business was formed
The state or tribal jurisdiction where the foreign company was registered
The company’s taxpayer identification number (TIN)
If a foreign company, the TIN given by a foreign jurisdiction and the name of that jurisdiction.

When it comes to beneficial owner reporting, the requirements are fairly simple. They must be reported to every beneficial owner and company applicant. The information required includes:

Full legal name
Date of birth
Current address
A copy of a (i) passport; (ii) state, local government, or Indian tribe ID card, (iii) driver’s license, (iv) passport issued by foreign government.

Identifying Beneficial Owners: Definitions & Responsibilities

A beneficial owner includes anyone who exercises substantial control over a reporting company. They can also be someone who owns 25% or more of the company. “Substantial control” can be a little ambiguous so FinCEN created a list of who might fall into the category.

Anyone who is a senior officer of a company
Anyone who has the authority to appoint or remove senior officers
Anyone who makes important decisions or has significant influence in a reporting company
Any other form of substantial control in a company

For some companies, there may be only a few beneficial owners. For others, there may be a significant amount of beneficial owners. It is important to note that it is only required to report current beneficial owners and as the beneficial owners change, this must be reported to FinCEN.

Do Company Applicants Have To Be Reported?

In addition to beneficial owners, reporting companies must also report their company applicants. This is the case only for companies created on or after January 1, 2024. If a company was registered before this date, company applicants are not required in the BOI report.

Company applicants are the individuals who file to create or register a reporting company. If there is more than one individual responsible for filing, then the company applicant is the individual who is primarily responsible and involved. An example of a company applicant might be a business attorney or accountant.

The Role Of Company Applicants In BOI Reporting

The deadlines for the BOI report vary depending on when your business was created.

If your company was registered before January 1, 2024, the deadline is January 1, 2025.
If your company was registered on or after January 1, 2024, and before January 1, 2025, you will have 90 days from receiving notice, be that an individual notice or the secretary of state’s public notice.
If your company will be created on or after January 1, 2025, you will have 30 days to report from received notice.
If your company must update or correct information, you will have 30 days from the date of the change to do so.

Consequences Of Non-Compliance: Understanding The Penalties

The penalties for not filing can be severe, so staying up-to-date on your information is important. For individuals who willfully refuse to report their beneficial owner information, they may be subject to up to $500 a day with possible criminal penalties of 2 years in prison and a fine of up to $10,000.

These penalties include willfully refusing to file, willfully filing incorrect information, and willfully not updating any changes to the beneficial owner. It is the reporting company’s responsibility to provide accurate and complete information and it is in their best interest to do so.

Give Yourself Peace Of Mind & Contact Our Expert Tax Attorneys

Don’t face the new beneficial owner reporting rules alone, consult with our team of expert tax attorneys at Corporate Transparency Act Filing Services who have a deep understanding of CTA. We offer strategic counsel to ensure your corporate compliance and mitigate any potential challenges.

Take proactive steps to navigate the Corporate Transparency Act successfully – contact us today for assistance!

Corporate Transparency Act Filing Services
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