IDENTIFYING BENEFICIAL OWNERS. The beneficial owner is an individual who (1) exercises substantial control over a reporting company, directly or indirectly, or (2) owns or controls at least 25% of a reporting company’s ownership interests. Corporations, limited liability companies, trusts, or other legal entities are not considered beneficial owners, so, in each case, beneficial ownership of interests held by a legal entity must be attributed to a natural person. More complex entities with pyramidal holding structures may require extensive analysis to attribute beneficial ownership to natural persons.
USING FINCEN IDENTIFIER NUMBERS. Individual beneficial owners, especially those holding interests in several entities, should apply online to receive FinCEN ID number. Reporting companies may report the FinCEN identifier of the individual in place of that individual’s otherwise required personal information. When a beneficial owner updates the personal information linked to FinCEN identifier number the system will automatically update the reporting company’s filing. No separate amendment is required to be filed by the reporting company.
REPORTING COMPANY APPLICANTS. Companies formed on or after January 1, 2024, have to report “company applicants” responsible for registering the business. There can be up to two individuals who qualify as “company applicants”: (i) the individual who directly files the registration document, and (ii) the individual who directs or controls the filing by another.
REPORTING DISSOLVED ENTITIES. An entity dissolved in 2024 must file a report with FinCEN, even if the entity is dissolved before the filing deadline. The entity remains active until it formally and irrevocably dissolves, i.e., pays final taxes or fees, ceases to conduct any business, files dissolution paperwork with its jurisdiction of creation or registration, and receives written confirmation of dissolution/termination.
REPORTING ENTITY CONVERSIONS. Converting from one legal structure to another (e.g., an LLC to a corporation) may create a new domestic reporting company that must file an initial report with FinCEN. Depending on the state, this conversion may establish a “new” reporting company. Even if a new reporting company is not formed, the entity may still need to submit an updated BOI report (e.g., when a reporting company changes its jurisdiction of formation by domestication). Authorization of an existing entity to do business in a new state does not trigger the need for an updated filing.
REPORTING DISPERSED OWNERSHIP. Even if no single individual owns 25% or more of the ownership interests of a reporting company, at least one individual must be named as a beneficial owner by reason of “substantial control.”
INACTIVE ENTITIES. An entity that was (i) in existence on or before January 1, 2020, (ii) is not engaged in active business, (iii) is not owned by a foreign person, (iv) has not experienced any change in ownership in the preceding 12-month period; (v) has not sent or received any funds in an amount greater than $1,000, in the preceding 12-month period; and (vi) does not otherwise hold any kind or type of assets, is exempt from the filing requirement.
AMENDING ENTITY’S GOVERNING DOCUMENTS. Any reporting entity that handles personally identifiable information of its beneficial owners should amend its governing documents to obligate beneficial owners to provide accurate and complete information promptly and adopt procedures for keeping such information up to date (e.g., timely reporting to the company a change in a beneficial owner’s legal name, address, or acceptable identification document).
