Who exactly needs to report?
After my last post, we got a lot of questions about how does and does not need to file so I recently uploaded a new video explaining the requirements. In this blog post, I’ll share key takeaways from the video, shedding light on the criteria defining beneficial ownership and its implications for businesses and individuals.
Defining a Beneficial Owner:
In the video, I discuss how Treasury regulations define a beneficial owner as an individual who exercises substantial control over the reporting company or owns and controls at least 25% of the ownership interests. Here are the key points:
- Individuals and Trusts:
- Beneficial owners must be individuals, excluding trusts, LLCs, or corporations.
- Trusts don’t need to file but if they are members of an LLC or hold shares in a corporation, associated individuals, such as grantors, trustees, beneficiaries, or trust protectors, may have reporting obligations.
- Substantial Control:
- Substantial control includes senior officers or individuals with authority over critical aspects of the reporting company.
- This encompasses board appointments, decision-making functions, and any other form of substantial control.
- Ownership of 25% or More:
- Ownership extends beyond traditional equity to include capital or profit interest.
- Convertible notes, puts, call options, and other financial instruments may also impact the calculation of the 25% ownership threshold.
- Considerations for Community Property Jurisdictions:
- In community property jurisdictions, the involvement of a spouse not named on the LLC or corporation is a crucial consideration many people don’t think about.
- Under specific circumstances, the uninvolved spouse could be deemed a beneficial owner.
Introducing our Compliance Service:
In conclusion, understanding who qualifies as a beneficial owner is crucial to avoid potential reporting violations. I’m pleased to announce our new compliance service, designed to assist with form completion and ensure compliance with FinCEN regulations.
Closing Thoughts:
This blog post aims to distill the key takeaways from my video on beneficial ownership under the Corporate Transparency Act. If you have questions or would like to use our compliance service we are available and happy to assist you to navigate these regulations with clarity and precision.