Defining Company Applicants: Insights into 2024 BOI Reporting

The BOI Reporting Rule is a new federal regulation mandating certain companies to report information about their company applicants to the Financial Crimes Enforcement Network (FinCEN). This rule came into effect on January 1, 2024, and applies to most corporations, Limited Liability Companies, and similar entities created or registered in the United States. If your business falls under this category, you’re required to file a Beneficial Ownership Information (BOI) Report with FinCEN, providing details about your company applicants.

In this blog, we’ll define a company applicant, explore why reporting their information is necessary, and provide insights into proper reporting procedures.

What is a “Company Applicant”?

A company applicant is a person who files the entity formation documents with the state or, tribe, or other U.S. jurisdiction. This individual can be a business owner or another individual, such as a CPA or attorney. The Beneficial Ownership Information can list up to two company applicants. 

In brief, a “company applicant ” is : 

(a) the person who directly files the document that creates or registers the reporting company and

(b) If more than one person is involved with filing the document, that person is primarily responsible for directing or controlling the filing. 

Importance of Reporting Company Applicant Information

The BOI Reporting Rule aims to gather and maintain precise, current details about individuals who ultimately own or oversee businesses operating within the United States financial system. 

FinCEN uses this information to combat money laundering, terrorist funding, tax evasion, fraud, and other financial crimes threatening the United States’ national security and economy.

Which Companies are Required to Report Company Applicant Information? 

Not all reporting companies are required to report their company applicants to FinCEN. A reporting company must report its company applicants only if these conditions are met: 

• A Domestic reporting company created in the United States on or after January 1, 2024 (or)
• A foreign reporting firm initially registered to do business in the U.S. on or after January 1, 2024.

A reporting company does not have to report its company applicants if either of the following conditions are met:

• A Domestic reporting company created in the United States before January 1, 2024, (or)
• A foreign reporting company was initially registered to do business in the U.S. before January 1, 2024. 

Two Categories of Company Applicants

Reporting companies required to report company applicants to FinCEN must provide information for one or two applicants. Additionally, the applicants must be individuals, not companies or legal entities.

There are two categories under a company applicant, which are:

• Company Applicant 1: Direct filer: The first category is for the individual who directly filed the document by creating a domestic reporting company or who directly filed the document initially registering a foreign reporting company. This person would have filed the document to the secretary of state or a similar office, either online or physically. 

Let’s clarify the concept of a Direct Filer company applicant with an example. John Allen establishes a new company, prepares the required documents, and submits them to the relevant State or Tribal office, either in person or online. No other individual is involved in the creation, organization, direction, or filing process.

John Allen is the only company applicant because he directly filed the document establishing the company and was involved in the filing. State or Tribal employees who receive and process the company creation or formation documents are not company applicants.

• Company Applicant 2: Directs or controls the filing action: The second category may not apply to all reporting companies that are required to report a company applicant. However, it becomes necessary to report under this category when more than one individual is involved in filing the document that establishes or first registers the company. The potential company applicant is the individual primarily responsible for directing or overseeing the filing of the creation or initial registration document. This individual qualifies as a company applicant, even if they did not physically submit the document to the secretary of state or a similar office.

Let’s explain the concept of a second-category company applicant with an example. Henry Lucas establishes a company, prepares the necessary documents, and instructs Zoe Pauline to file them with the relevant State or Tribal office. Zoe Pauline then directly files the documents, resulting in the establishment of the company.

Zoe Pauline directly filed the documents, and Henry Lucas was primarily responsible for directing or controlling the filing. Therefore, Zoe Pauline could be Henry Lucas’s spouse, business partner, attorney, or accountant. Thus, Henry Lucas and Zoe Pauline are both company applicants in this scenario.

Simplify Your BOI Reporting with TaxBandits!

As a business owner, it’s essential to fulfill your responsibility by providing the necessary beneficial owner(s) information via the BOI report. Neglecting this obligation may subject you to serious penalties for noncompliance. Maintaining compliance is crucial for safeguarding your business.”

To simplify the reporting procedure, file the BOI report through TaxBandits. Our application is intended to help reporting companies more efficiently achieve their reporting requirements. 

Proactively fulfill your reporting obligations to avoid penalties and uphold the transparency and integrity of your company operations.

Begin your BOI filing today with TaxBandits!

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