Introduction
With the new Beneficial Ownership Information (BOI) reporting requirements coming into effect on January 1, 2024, it’s essential to understand what "beneficial ownership" means. This term is central to the reporting rules and determines who needs to be listed in your business’s BOI report. In this post, we’ll break down the concept of beneficial ownership in simple terms. When you File your BOI with us we also walk you through the process in a seamless way.
Defining Beneficial Ownership
Beneficial ownership refers to the individuals who owns or controls a business. These are the people who benefit from the company’s operations, whether through direct ownership or by exerting significant control over business decisions. Under the new rules, if someone owns or controls 25% or more of your business, they are considered a beneficial owner and will need to be included when you file your report.
Types of Beneficial Owners
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Direct Owners: These are individuals who hold a significant percentage of the company’s shares or equity. For example, if your business is a corporation and someone owns 30% of the shares, they are a direct beneficial owner.
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Controllers: Beneficial owners can also be individuals who exercise substantial control over the company, even if they don’t own a large percentage of it. This could be someone who makes important decisions for the business, like a CEO or a key executive.
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Indirect Owners: Sometimes, beneficial ownership isn’t straightforward. An individual might control a company through a series of other companies or trusts. For example, if someone owns 25% of a company that, in turn, owns 50% of your business, that individual might be considered a beneficial owner.
Why Identifying Beneficial Owners is Important
The purpose of identifying beneficial owners is to provide transparency. The government wants to know who truly benefits from a company’s operations, especially to prevent financial crimes like money laundering. By reporting beneficial ownership through File BOI we help to ensure that your business is includes all the people in control to keep you compliant in order to avoid any penalties.
How to Identify Beneficial Owners in Your Business
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Review Ownership Structure: Look at who owns shares or equity in your business. If anyone holds 25% or more, they’re a beneficial owner.
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Consider Control: Even if someone doesn’t own a significant percentage, think about who has substantial control over the business. This could include top executives or board members who make key decisions.
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Check for Indirect Ownership: If your business is part of a larger group of companies, you might need to look at the ownership structure of those other companies to determine if there are any indirect beneficial owners.
Reporting Beneficial Owners
When you file your BOI report, you’ll need to provide specific details about each beneficial owner. This includes:
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Full legal name
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Date of birth
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Residential address
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Identification number (such as a driver’s license or passport number)
It’s important to ensure that this information is accurate and up to date.
What If You Miss Someone?
If you realize after filing that you’ve missed someone who should have been reported as a beneficial owner, you’ll need to correct your filing. Our system allows you to submit amendments to update your BOI report at no additional cost for an entire year!
Conclusion
Understanding beneficial ownership is crucial for complying with the new BOI reporting requirements. By accurately identifying and reporting the individuals who own or control your business, you help promote transparency and contribute to a safer business environment. Make sure you know who your beneficial owners are and include their information in your BOI report to stay compliant with the new regulations.
