Corporate Transparency Act Beneficial Ownership Information Reporting is now open to business entities formed in U.S.

Who are Beneficial Owners for BOIR?

The Corporate Transparency Act requires that U.S. companies report their beneficial owners to FinCEN. The idea of a beneficial owner has many layers, making it easy for businesses to miss someone and submit incomplete Beneficial Ownership Information Reports (BOIR).

We’re here to help you understand who your beneficial owners are, making sure your BOIR is complete and accurate. This way, you can avoid some common pitfalls and ensure your business is fully compliant.

Who are Beneficial Owners?

Put simply, beneficial owners are the significant owners and key decision makers involved in a business. Beneficial owners include any individual who: 

  1. Own at least 25% of a company, or
  2. Exercises “substantial control” over the company and its business operations. 

Typically, this includes major shareholders in a corporation or members of an LLC, as well as senior officers, managers, and directors due to their influential roles. U.S.-based businesses must disclose information about their beneficial owners to FinCEN, a bureau of the U.S. Treasury Department, by filing Beneficial Ownership Information Reports (BOIR).

What is Substantial Control?

FinCEN uses the term “substantial control” to describe important roles in a company’s leadership structure. Individuals with substantial control have influence over important decisions related to a company’s business strategy, finances or structure. 

Beneficial owners with substantial control include any senior officers, board members or anyone with a similar set or responsibilities. Anyone who has substantial control over the company, not just those with official titles, can be a beneficial owner.

Examples of Beneficial Owners

Here are some examples of beneficial owners for different types of entity structures:

Who are Beneficial Owners in a Corporation?

Beneficial owners in a corporation typically include:

  • Shareholders owning 25% or more of the company stock,
  • All senior officers, including CEO, CFO, COO, and General Counsel, and
  • Members of the board of directors.

A corporation’s majority shareholders count as beneficial owners. For example, consider a corporation that issues 100 shares of stock. Anyone who owns 25 or more shares qualifies you as a beneficial owner. 

This rule also applies to agreements for future ownership, like stock options. For example, if you control stock options that could eventually give you a 25% ownership stake in the company, you’re considered a beneficial owner.

Corporations also need to report their senior officers and board of directors as beneficial owners. These individuals have a significant level of decision-making power that places them in this category.

Who are Beneficial Owners in an LLC? 

Beneficial owners in an LLC, often include:

  • LLC Members owning at least 25% of the company,
  • LLC Managers with authority to represent the company, and
  • Anyone with power to make major decisions for the company.

LLC Members who own 25% or more of the total membership interests are the company’s beneficial owners. The LLC Operating Agreement should clearly outline the company’s  ownership structure, making it easy to identify beneficial owners.

Beneficial ownership in an LLC goes beyond just holding membership interest however. It also includes individuals who financially benefit from the LLC, even if they are not formal Members. 

For example, an LLC might have investors or business partners that receive a share of the company’s profits. However, they do not have voting rights or control in the company. If individuals have a profit share equal to 25% of the company’s total value, you must report them as beneficial owners.

What is Ownership Interest?

“Ownership interest” generally refers to arrangements for rights often tied to either a financial interest or voting power in a company.

The most common forms of ownership interest are shares in a corporation and membership interest in an LLC. However, there are many types of ownership interest that can exist within a company, for example: 

  1. Stock options in a corporation,
  2. Profit or capital interest in an LLC,
  3. Convertible equity in a corporation, or
  4. Ownership through a holding company or a trust.

Read more about different types of beneficial ownership. 

Step-by-Step Guide to Identifying Beneficial Owners 

Businesses need to report all of their beneficial owners to meet FinCEN’s requirements for BOIR. Given the strict penalties for non-compliance, it’s crucial for business owners to fully understand beneficial ownership so they avoid leaving out key individuals from their reports.

Follow these steps to identify all of your company’s beneficial owners:

Step 1. Identify Direct Owners

Your first step should be to list everyone who has direct ownership in your company. In a corporation, these are often the company’s shareholders. Likewise, for an LLC, the LLC Members are typically the company’s direct owners. 

Anyone who owns or controls 25% or more of the company’s total stock or membership interests is a beneficial owner.

Step 2. List Senior Officers and Managers

Review your company’s organizational chart. Identify all senior officers, executives, and anyone else involved in making important decisions. These key players are considered beneficial owners because they exercise “substantial control” over the company’s business operations. 

For corporations, this also means including all directors. LLCs should list their Managers and any other individuals authorized to act for the company.

Step 3. Spot Indirect Ownership. 

Identify all forms of ownership that exist in your company. These may include things like stock options, warrants and other similar agreements. These agreements often give someone a right to gain ownership or control in the company at a future date. 

Any arrangements for future rights to equity need to be counted towards calculating someone’s beneficial ownership. Treat these agreements as if they are effective today.

Step 4. List Any Important Decision Makers

Think about individuals who impact any major decisions made within your company. These people have “substantial control” over your company, and they need to be reported as beneficial owners. 

Their specific title or role in the company doesn’t matter; it’s their influence on crucial business decisions that counts.

Step 5. Identify Ownership Through Other Entities

Your company might be wholly or partly owned by another entity, like an LLC, corporation, or a trust. If this is the case, you need to dig into their legal structures to find out who the ultimate beneficial owners are.

The beneficial owners you report in the BOIR need to be real people. If your business is owned by a holding company, identify beneficial owners of the holding company. 

If your company is owned by a trust, you need to report specific individuals involved in the trust as beneficial owners. These include the trustees, beneficiaries and the grantor of the trust. 

Exceptions for Beneficial Owners

FinCEN’s rules for BOIR highlight certain individuals who do not need to be reported as beneficial owners. Business owners need to carefully review these exception categories to ensure they do not accidentally leave out a beneficial owner from their BOI Report. 

You do not need to report individuals who fall into one of the following categories: 

Minor Children Under Age 18

Minor children do not need to be included in the BOI Report. This is true even if they own 25% or more of the company. However, the minor child’s parent or legal guardian needs to provide their own information in the BOI Report to satisfy FinCEN’s requirements.

The company will need to file an Updated BOI Report  with FinCEN once the child turns 18 to list them as a beneficial owner.


Companies do not need to report intermediaries. These include contractors, consultants, advisors, tax professionals, nominees, custodians, or agents. 

These individuals act on behalf of a reporting company. However, they do not hold any ownership stake in the company, or have substantial control over its operations.


You don’t need to report general employees for BOIR if they don’t own any part of the company. FinCEN defines “employees” as anyone who works under the complete direction of their employer and whose only financial interest in the company is their salary.

Simply put, you don’t need to include an employee in the BOI Report if they:

a.) Are not a senior officer,  

b.) They are not involved in making important decisions, and

c.) They are not 25% owners in the company. 

Anyone Inheriting Ownership

Reporting companies are not required to list anyone standing to inherit an ownership stake in the future. However, once someone does fully inherit ownership, the company will need to file an Updated BOI Report with FinCEN to include the change.

Regulated Business Creditors

Business creditors don’t count as beneficial owners if they cannot gain ownership in the company. However, reporting companies do need to include any private lenders who could gain control of the business. 

Creditors with a right to foreclose on the business, or who can gain control over the company through a loan covenant, must be reported as beneficial owners. 

Can Companies be Beneficial Owners?

Can an entity like an LLC, corporation, or partnership be a beneficial owner? The simple answer is, no. The beneficial owners listed in a company’s BOI Report need to be real people.

Although legal entities can own parts of other businesses, such as in a holding company setup, you cannot list LLCs and corporations as beneficial owners in a BOI Report.

Your BOI Report needs to look beyond just naming companies as owners. When a legal entity owns 25% or more of a reporting company, you need to identify who’s really behind the company. 

The BOI Reporting process demands that you identify the actual individuals running the show in your business. It’s about uncovering the real faces with significant control or stake in the company, not just the corporate facades.

Can a Trust be a Beneficial Owner?

A trust is a type of legal entity often used to hold assets for another entity’s benefit. You cannot list trusts as beneficial owners in a BOI Report.

If a trust owns a company, its BOI Report must identify specific individuals involved with the trust:

The Trustees

A trustee is basically a manager of the trust. They are able to handle the trust assets and make distributions. A trustee is a beneficial owner if they:

  • Control the trust property, like real estate or other assets, 
  • Can withdraw assets from the business, or 
  • Are the only ones receiving income from the trust. 

The Beneficiaries

Beneficiaries are the individual or the group of individuals whom a trust is meant to benefit. A beneficiary is a beneficial owner if they:

  • Can ask for distributions from the trust, or
  • Are able to take out all of the trust’s assets.

The Grantor or Settlor

The grantor, also called the settlor, is the person who creates the trust. A grantor is a beneficial owner if they are able to:

  • Withdraw assets or make loans from the trust, or
  • Revoke the trust all together. 

Understanding beneficial ownership gets complicated with trusts involved. Getting legal advice on your company’s reporting needs is wise, especially when several entities are involved.

Do LLCs Have Beneficial Owners?

Yes, every LLC will have at least one beneficial owner. A beneficial owner is anyone who has 25% of the ownership or has substantial control over the company.

If your company is a single-member LLC, you may be the sole beneficial owner. However, consider anyone else who may be able  to act on behalf of your company, or has influence over your business. These individuals can be beneficial owners of the company even if they are not Members in the LLC.