Company Applicant vs. Beneficial Owner—Roles Explained

With the Corporate Transparency Act (CTA) in effect from January 1, 2024, there are various new terms—like beneficial owners and company applicants—that organizations must be familiar with to fully comply with the legislation.

The Act requires all covered entities to disclose information on their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), while only some are obligated to report on their company applicants. Understanding the difference between the two roles is crucial for meeting your beneficial ownership information (BOI) reporting requirement.

In this article, we’ll shed light on the role of a company applicant vs. a beneficial owner under the CTA. We’ll also introduce you to Harbor Compliance, a reputable service provider that simplifies the entire BOI reporting process for businesses.

What Is a Company Applicant?

A company applicant is an individual who has directly filed a document or is primarily responsible for filing a document that creates or registers an entity.

As per the CTA, entities created on or after January 1, 2024, must disclose company applicant information along with their BOI details to FinCEN. Companies created before this date are not required to report on their company applicants.

In most cases, entities will have to report on only one company applicant—the individual who directly filed the formation or registration document, otherwise known as the “direct filer.” If more than one person was involved in the creation of an entity, such an entity will have to report a second company applicant—an individual who “directs or controls the filing action.”

Unlike beneficial owner information, company applicant information does not need to be kept up to date. Even if your entity no longer has a relationship with the company applicant, that information does not change.

What Is a Beneficial Owner?

According to the CTA, a beneficial owner is any individual who, directly or indirectly, owns or controls at least 25% of the ownership interest in a company. Alternatively, this can be a person exercising “strong or substantial control” over an entity. The second category of beneficial owners includes the following individuals:

1. Key decision-makers
2. Senior officers
3. Anyone with control over a company’s daily operations
4. Anyone who can appoint or remove senior officers

An individual can qualify as a beneficial owner through ownership, control, or both. Reporting entities are not required to specify the basis on which an individual is considered a beneficial owner.

Exceptions to the Beneficial Owner Definition

According to the CTA, there are certain individuals who would otherwise be considered beneficial owners but whose information doesn’t have to be disclosed to FinCEN. They are as follows:

• Employees
• Minors
• Creditors
• Inheritors
• Nominees/custodians

When it comes to minors, you’ll have to include their parents’ or guardians’ identification data. Once they reach adulthood, you can provide their information via an updated BOI report. Meanwhile, an employee will only be exempt if they:

• Don’t work as a senior officer
• Work under a manager who can relieve them of their duties
• Gain economic benefits or control solely through their employee status

What Information Should You Provide on Your Beneficial Owners and Company Applicants?

All reporting companies must provide the same information about their beneficial owners and company applicants, namely their:

• Full legal name
• Date of birth
• Address
• Identification number
• Image of the document used to obtain the identification number

Keeping all information on beneficial owners up to date can be time-consuming for businesses. More importantly, failing to update FinCEN about any changes can lead to significant fines and penalties.

To avoid such scenarios and meet the BOI reporting requirement effortlessly, consider partnering with a professional service provider like Harbor Compliance.

Leverage Harbor Compliance’s Expert BOI Reporting Service

Harbor Compliance’s BOI Reporting Service streamlines the BOI reporting workload for all reporting companies. From preparing and filing initial reports to helping you keep your BOI details current, we can take over the entire BOI reporting process and save you valuable time and effort.

Once you partner with us, we’ll collect information on your beneficial owners and company applicants through our secure digital portal. We’ll then prepare your initial BOI report and submit it to FinCEN.

Even if your information changes after filing the initial report, we’ll prepare and submit an updated report to notify FinCEN and ensure you remain compliant with CTA’s reporting requirement. Our service includes up to four initial, corrected, or updated BOI reports in a single calendar year.

Our software solutions provide complete visibility into your beneficial ownership information, allowing you to track any changes and centralize data on a single platform. In addition, we’ll send periodic automated notifications to remind you of any upcoming filing requirements.

Benefits of Harbor Compliance’s BOI Reporting Service

Delegating your BOI reporting workload to Harbor Compliance comes with many benefits, most notably:

• Peace of mind—Partnering with experts in compliance matters drastically reduces the likelihood of failing to submit a report on time and facing fines as a consequence.
• Time savings—According to FinCEN, it can take you approximately three hours to prepare and submit a single BOI report. If you partner with us, you can dedicate this time to more impactful activities and strategic decision-making.
• Records Manager—This software solution lets you track key ownership and leadership information from a centralized location, which is especially important in the context of BOI reporting.

How To Order Our BOI Reporting Service

Our platform provides a simple signup wizard that allows you to quickly order our BOI Reporting Service. All you need to do is follow the steps below:

1. Choose the option according to your needs (single business, multiple entities).
2. Provide details like your name, email address, and entity structure.
3. Pay a flat annual fee before checkout to finalize the order.

Additional Services by Harbor Compliance

Apart from BOI reporting, we can help you meet various other regulatory requirements across the U.S. Refer to the table below for a quick overview of our most popular services in different categories:

Beneficial Owner vs. Company Applicant FAQs

Below you’ll find answers to some commonly asked questions about the difference between a company applicant and a beneficial owner. Learn more on FinCEN’s FAQ page or our Information Center.

Simplifying BOI Reporting With Harbor Compliance

A company applicant and beneficial owner are essential concepts within the CTA’s regulatory framework. You must keep their information current in your BOI reports to ensure full compliance with CTA’s reporting requirement. Our BOI Reporting Service helps you do just that and more.

Beyond BOI reporting, we can help you meet various other state requirements and maintain good standing and uninterrupted operations. Get your FREE Harbor Compliance Score™ and identify areas where our expert support could benefit you the most. You can also schedule a free software demo to get an idea of how our advanced software solutions simplify compliance workloads for businesses.