Beneficial Owners vs. Company Applicants: What’s The Difference?

Learn how FinCEN defines beneficial owners of a reporting company and how this is different from the company applicant.

Stephanie Glanville | December 3, 2024 | Read time: 5 minute(s) | BOI Reporting | No Comments

Difference between a beneficial owner and company applicant

The Corporate Transparency Act (CTA) mandates that certain small businesses across the United States must submit the Beneficial Ownership Information (BOI) Report with FinCEN before January 1, 2025. When it comes to the reporting process, understanding the key difference between beneficial owners and company applicants is a major concern. Without knowing the differences, completing the BOI reporting process without any inaccuracies is a complex task.

In this article, we’ll break down the major difference between the beneficial owners and company applicants.

Beneficial Owner – An Overview

According to FinCEN, a beneficial owner is defined as any individual or entity who exercises substantial control over a reporting company or owns or controls more than 25% of the ownership interest over a reporting company, either directly or indirectly. The reporting company can have a maximum number of beneficial owners. So, every reporting company must submit information about their beneficial owner in the BOI report to meet regulatory compliance requirements.

Company Applicant – A General Overview

A company applicant is a person who is responsible for preparing the necessary documents to register the reporting company with the Secretary of State or with a similar office. It is important to note that the company can have up to two company applicants. Legal companies or organizations cannot be considered as company applicants.

Hence, these are the general definitions of beneficial owners and company applicants. However, there are some major differences between both of them. Understanding the key differences while preparing a BOI report correctly and accurately is very important to avoid the FinCEN penalties.

Let’s look at the table to learn more about the difference.

Aspect	Beneficial Owners	Company Applicants
Definition	Individuals or entities that own or control 25% or more of a company or have substantial control.	Individuals responsible for filing the formation or registration documents of a company.
Ownership/Control	Must own at least 25% of the company or exercise substantial control (e.g., CEO, key decision-makers).	Responsible for registering the company with the state or jurisdiction.
Examples of Roles	CEO, CFO, major shareholders, decision-makers, and senior officers.	Direct Filer (files documents) or Directs/Controls the filing.
Exemptions	Minor children, nominees, employees (non-senior positions), creditors, or inheritors.	Legal entities or organizations cannot be considered company applicants
Reporting Requirement	Must be reported to FinCEN if they meet ownership/control criteria.	Must be reported to FinCEN for companies formed after January 1, 2024.
Number of Individuals	Companies can have multiple beneficial owners.	Companies can have up to two company applicants.

Conclusion

Both Beneficial Owners and Company Applicants play an important role in a business ownership structure. Understanding these differences allows us to complete the BOI filing process easily. As the deadline fast approaches, filing the BOI reports with accurate and proper information is very important.

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