Beneficial Ownership Information Reporting – What You Need to Know

Deadlines, Penalties & Requirements of the Beneficial Ownership Information Report

The Corporate Transparency Act, commonly known as the CTA, was enacted by Congress to further corporate transparency by identifying the people behind companies. For this reason, companies are now required to report information to FinCEN about the individuals who ultimately own or control them in a beneficial ownership information (BOI) report. FinCEN began accepting reports on January 1, 2024. Use the links below to navigate this page:

Beneficial Owners Defined

General Rule: An individual who, directly or indirectly, exercises “Substantial Control” over a Reporting Company or owns or controls at least 25 percent of the Ownership Interests of a Reporting Company.

Indicators

  • Senior Officer: President, CEO, COO, CFO, General Counsel, or any other officer, regardless of official title, who performs similar functions.
  • Appointment or Removal Authority (of a Senior Officer or majority of Board of Directors). 
  • Important Decision Maker over important decisions (e.g., business, finances, structure).
  • Catch-All: Any other form of Substantial Control.

Comments

  • Equity ownership is not necessary under this test.
  • Test requires all individuals who exercise Substantial Control over an entity to be identified and reported.
  • Directors may exercise Substantial Control, depending on facts, but application unclear. 

Three-Part Analysis

  • Ownership Interest: Equity, stock, voting rights, capital or profits interests, convertible instrument, options and other ownership mechanisms. 
  • Ownership or Control of Ownership Interest: Any contract, arrangement, understanding, relationship or otherwise, such as through direct or indirect ownership, debt, joint ownership, nominee, trust, or owning or controlling intermediate entity that owns/controls Reporting Company. 
  • Calculation: Determine whether an individual directly or indirectly owns or controls 25 percent of the ownership interest (by reference to voting power, value, capital and profits interests or, if foregoing calculations cannot be performed with certainty, an individual is deemed to hold 25 percent ownership/control provided the individual owns/controls 25 percent or more of any class of ownership interest. 

Exceptions from Beneficial Owner Definition: 1) Minor child, 2) nominee, intermediary, custodian, agent, 3) employee (other than Senior Officer), 4) inheritor (future interest through a right of inheritance), and 5) creditor.

Company Applicants Defined

Definition: A Company Applicant is an individual involved with the formation or registration of a Reporting Company. 

  • Category 1: The individual who directly filed the document that created a Domestic Reporting Company or that first registered a Foreign Reporting Company with a secretary of state or similar office. 
  • Category 2: The individual who was primarily responsible for directing or controlling the filing of the creation or registration document, provided more than one individual was involved in the filing. 

Comment: A Reporting Company formed on or after Jan. 1, 2024 (but not before) must report at least one Company Applicant and, at most, two. 

What are the Reporting Obligations of a Reporting Company to FinCEN?

Reporting Company Created/Registered Before Jan. 1, 2024

Provide information about:

  • Itself
  • Beneficial Owners
  • But not Company Applicants

Reporting Company Created/Registered On or After Jan. 1, 2024

Provide information about:

  • Itself
  • Beneficial Owners
  • Company Applicants

Frequently Asked Questions & Links

FAQ

Beneficial ownership information refers to identifying information about the individuals who directly or indirectly own or control a company.

The deadline is December 31st, 2024 for companies created prior to 1/1/2024, with the exception of new companies created in 2024. In addition, companies created this year have 90 days to file.   

A corporation, LLC or entity created by the filing of a document with a secretary of state or any similar office under the laws of a state or an Indian tribe (including U.S. territories and possessions). Currently FinCEN is requiring the owners and responsible parties (including attorneys) to go to the FinCen website and report this information. 

Reporting of BOI report with FinCEN is not considered an accounting, tax or consulting service. Therefore, filing the BOI by us may be considered unauthorized practice of law. However, we are currently waiting on Guidance from the State Bar. It should be noted, that the FICPA is implying that there is a high chance CPAs in Florida will be allowed to provide this service.   

Click to File on FinCEN’s website

If you are a client that receives ongoing accounting and tax services on a monthly payment arrangement, please know that we will guide you through this process. Further, we will provide you with more information within the next 90 days if not sooner. Importantly, if you have registered a new business in 2024, please contact us as soon as possible.   

We’ve compiled a list of the most useful links on FinCEN’s website here:

How to File the BOI for Your Business

Treasury Secretary, Janet Yellen Confirms the Validity of This New Requirement

Our team of dedicated CPAs stand ready to navigate you through the changing terrain of the Corporate Transparency Act, ensuring you are well-informed about every aspect, especially concerning beneficial ownership information reporting. Rest assured, we are committed to providing expert guidance as you navigate this evolving landscape.

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