Beneficial Owner

A beneficial owner is any individual who directly or indirectly exercises substantial control over a legal entity or owns or controls at least 25% of the ownership interests of the entity, as defined under the Corporate Transparency Act (CTA) enacted in 2021 and enforced by the Financial Crimes Enforcement Network (FinCEN). Effective January 1, 2024, most U.S. companies are required to file Beneficial Ownership Information (BOI) reports with FinCEN, disclosing the full legal name, date of birth, residential address, and a unique identifying number (from a passport, state ID, or driver's license) plus an image of the identification document for each beneficial owner. Companies formed before January 1, 2024 had until January 1, 2025 to file initial reports, while newly formed entities must file within 90 days of formation (reduced to 30 days for entities formed after January 1, 2025). Failure to comply carries civil penalties of up to $591 per day (adjusted annually for inflation) and criminal penalties of up to $10,000 and 2 years imprisonment for willful violations. The CTA applies to approximately 32.6 million existing companies and 5 million new entities formed annually, with 23 specific exemptions including publicly traded companies, banks, credit unions, insurance companies, and entities with more than 20 full-time employees, $5 million+ in gross receipts, and a physical U.S. operating presence. For multi-member LLCs, trusts holding LLC interests, and corporate structures with layered ownership, determining beneficial ownership requires traversing the entire ownership chain to identify the natural persons meeting the 25% or substantial control thresholds. doola assists clients with beneficial ownership determination, BOI report preparation, and ongoing update filings when ownership changes occur.