Beneficial Owner Report Beginning in 2024

ecommerce and finance symbols

Beneficial Owner Report Beginning in 2024

Beginning January 1, 2024, many companies will be required to report their beneficial ownership information (BOI) to the Financial Crimes Enforcement Network, or FinCEN, a bureau of the U.S. Treasury Department. Generally, a beneficial owner is someone who ultimately owns or controls the company.

Companies required to report

A reporting company includes corporations, limited liability companies (LLCs), or other types of companies created by filing a document with the secretary of a U.S. state or any similar office under the laws of a U.S. state or Indian tribe. A reporting company also includes foreign companies similarly registered to do business in any U.S. state or Indian tribe.

Companies exempt from reporting

There are 23 types of entities exempt from this reporting. Exempted entities include banks, insurance companies, nonprofits, inactive entities, and publicly traded companies. See the BOI Small Compliance Guide (specifically, page 11) for more information.

Who is considered a beneficial owner?

A beneficial owner is any individual who, directly or indirectly, exercises substantial control over the reporting company or owns or controls at least 25 percent of the ownership interest of the reporting company. A reporting company can have multiple beneficial owners.

What is substantial control?

According to FinCen, an individual is considered to exercise substantial control over a reporting company if the individual meets any of the following four criteria:

  1. The individual is a senior officer. This includes those holding a position or exercising authority as president, CEO, CFO, chief operating officer, general counsel, or others performing similar functions to those described.
  2. The individual has the authority to appoint or remove certain officers or a majority of the board of directors of the reporting company.
  3. The individual is an important decision-maker. This includes decisions involving the reporting company’s business, finances, or structure.
  4. Any other individual with any other form of substantial control over the reporting company.

What is an ownership interest?

Ownership interests include stock, voting rights, options, convertible instruments, or any other type of interest used to establish ownership. An interest may be capital or profits in nature.

Direct and indirect ownership

Individuals may be considered beneficial owners by either direct or indirect ownership interests. A beneficial owner may own or control interests in a reporting company through ownership in intermediate entities who, in turn, own or control interests in the reporting company.

In addition, a beneficial owner may indirectly own or control an interest in a reporting company through another individual who acts as an agent, nominee or custodian.

Information required to be reported

Reporting Company

A reporting company must disclose its legal name, trade name, U.S. address, jurisdiction of formation, and taxpayer identification number.

Beneficial owner

Each beneficial owner of the reporting company must disclose in the reporting company’s report the beneficial owner’s full legal name, date of birth, complete current address, unique identifying number and issuing jurisdiction.

In addition, the beneficial owner must provide an image of one of the following non-expired documents: U.S. passport, state driver’s license, or identification document issued by a state, local government, or tribe. If none of these documents are available, the beneficial owner must provide an image of his or her foreign passport.

When and how to file

Reporting companies that existed before January 1, 2024, must file their initial BOI report by January 1, 2025. Reporting companies organized during 2024 can file their initial BOI report within 90 calendar days of receiving actual or public notice of the company’s creation or registration. Companies created or registered on or after January 1, 2025, have 30 calendar days to file their initial BOI report.

Companies must file their BOI report electronically through FinCEN’s filing system.

What does PSA think?

The new FinCen reporting on beneficial owners of reporting companies will impact many companies and their foreign and domestic owners. The reporting rules are structured to be pervasive and far-reaching. Please consult your tax adviser for assistance in determining your or your company’s filing requirements.

Did you enjoy this post? Sign up to receive our latest News & Insights!

Field are marked with * are required.

By submitting this form, you are consenting to receive marketing emails from: . You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact