Is Your BOI Company Applicant Included in Your BOI Report?

When it comes to completing Beneficial Ownership Information (BOI) reports for entities formed on or after January 1, 2024, a common oversight is the inclusion of the BOI company applicant. In this blog, we’ll delve into why reporting the company applicant is essential, how to ensure it’s not overlooked, and the role of legal and financial professionals in streamlining this task.

Understanding the Role of the BOI Company Applicant

Under the Corporate Transparency Act (CTA), a company applicant is an individual that is responsible for filing and managing the filings of the necessary documentation to establish a new business entity. 

This role can often be filled by a lawyer, accountant, or another professional advisor who assists in the formation process. Business owners may also be company applicants.

Why is the BOI Company Applicant Important?

1. Regulatory Compliance: Including the company applicant in the BOI report ensures full compliance with the Corporate Transparency Act (CTA). This act mandates that all entities disclose their beneficial owners and the individuals who aided in forming the company. Proper reporting helps avoid penalties and maintains transparency.
2. Accurate Representation: The company applicant’s inclusion may provide a complete picture of the entity after its formation. It identifies the person or entity who managed the creation process, which is important to the relevant regulatory authorities.
3. Accountability: The Financial Crimes Enforcement Network (FinCEN), the regulatory body collecting BOI reports, may want to collect the identity of the company applicants if any questions or issues arise regarding the business’s purpose of formation.

Common Oversights (and How to Avoid Them)

Despite the importance of reporting the company applicant, it’s a step that is easily overlooked. This oversight can lead to incomplete reports and potential non-compliance. Here’s how to ensure this step is not missed:

1. Standardized Processes: Implement a standardized procedure for new entity creation that includes a checklist for all required filings – including that under the CTA. Ensure that recording the individuals who may be company applicants is a step in your process.
2. Clear Communication: Legal and financial professionals should clearly communicate the need to include themselves as a company applicant when advising clients to file their BOI reports for their new entity. Make sure to ask your professional who from their organization needs to be on the report.
3. Double-Check Submissions: Before finalizing and submitting the BOI report, double-check that all required information, including the company applicant’s details, is included. Implementing a review process can help catch any missed details.

The Role of Professionals in Ensuring Accurate Reporting

Lawyers, accountants, and other professionals play a pivotal role in ensuring that all aspects of the business formation and compliance process are handled correctly. Here’s how they can assist:

1. Guidance and Reminders: Professionals should provide clients with clear guidance on their reporting obligations, including the need to include the company applicant. They can also remind clients of these requirements as part of their service.
2. Standard Procedures: Incorporate the requirement to report the company applicant into standard new entity creation procedures. This helps ensure that no steps are missed and that clients are aware of their responsibilities.
3. Regular Updates: Keep clients informed about any changes in reporting requirements or best practices. Regular updates help maintain compliance and reduce the risk of overlooking critical steps.

Accurate and complete reporting of the company applicant in Beneficial Ownership Information reports is crucial for regulatory compliance and transparency. By understanding the importance of this role and implementing measures to ensure it is not overlooked, businesses and professionals can maintain adherence to the Corporate Transparency Act and avoid potential issues.

To ensure you’re meeting all compliance requirements, consider consulting with a professional who can guide you through the process and help integrate these steps into your routine practices. Properly reporting the company applicant is not just a regulatory requirement—it’s a key element of maintaining transparent and accountable business operations.