The BOI reporting requirements go beyond basic business filings and require a thorough examination of ownership structures to determine who truly holds beneficial ownership according to FinCEN’s definitions.
May 16th, 2024 • 5 min read
For entities wholly owned and controlled by a single individual, the reporting process might appear straightforward. However, this scenario is more the exception than the norm. Most entities feature complex ownership structures that require detailed analysis to accurately identify Beneficial Ownership Information (BOI). FinCEN regulations define “beneficial owners” as individuals who directly or indirectly:
The BOI reporting requirements go beyond basic business filings and require a thorough examination of ownership structures to determine who truly holds beneficial ownership according to FinCEN’s definitions.
A key component to FinCEN’s definition of beneficial owner is the term “indirectly”. Including individuals who indirectly own or exercise substantial control over a company significantly expands the pool of potential beneficial owners. To comply with FinCEN BOI Reporting, it is essential to analyze not only the direct owners but also those higher up in the organizational structure.
A common misconception is that if one entity within a company’s ownership structure is exempt from BOI Reporting, then all related entities are also exempt. This is often not the case. Each entity and its subsidiaries must be individually analyzed to determine their BOI Reporting requirements. In industries like real estate, joint ventures between general and limited partners are commonly formed to finance and acquire projects. However, one partner's exemption does not extend to the other. This necessitates gathering detailed information not only from your entity but also from your joint venture partners, adding an extra layer of complexity to the process.
To determine their BOI, companies must carefully review the regulations and determine how to apply them to their specific circumstances. Given the complexity of these regulations, FinCEN has provided additional resources including FAQs, small entity guides, and other explanatory materials, to help companies navigate the intricate nuances. This level of regulatory review and analysis surpasses the services typically offered by registered agents. You really need lawyers to perform the BOI analysis.
Many companies struggle to determine who is best suited to help them identify their BOI. Law firms often avoid performing BOI analysis due to the high cost associated with billable hours given the complexity and number of entities involved. Accounting firms often avoid performing BOI analysis because interpreting the regulations constitutes practicing law. Ultimately, the responsibility to accurately identify BOI falls on the company itself, leading to anxiety as businesses seek a suitable solution to complete their BOI analysis.
While analyzing your BOI can be daunting due to complex ownership structures and extensive regulatory requirements, the right FinCEN BOI Reporting solution can simplify the process by:
Any platform that does not offer the complete package is not a true solution. Ensuring that your solution meets each of these requirements is crucial for reducing the time and resources needed to comply with FinCEN BOI Reporting.
Contact us to learn more about what Seedjura.CO Module can do for you and your business.