Understanding Company Applicants: Key Requirements for BOI Reporting Guidelines

Starting a business involves understanding and fulfilling various legal requirements, including identifying the company applicant as per the Financial Crimes Enforcement Network (FinCEN).
This individual plays a vital role in the formation and registration of a reporting company, particularly under the new guidelines effective January 1, 2024.
This article will detail what defines a company applicant, the essential information they must submit, and the specific situations that necessitate reporting this data.

Who is a company applicant?

According to the "FinCEN rule", reporting companies formed or registered on or after January 1, 2024, should be required to identify and submit the company applicant's details in the BOI report to FinCEN.
The company applicant must be an individual who is responsible for BOIR filing the necessary documents to create or register the reporting company with the secretary of state or a similar office.
The company can have a maximum of two company applicants. Legal entities or organizations cannot be considered the company applicant.

Which types of entities need to be reported?

Reporting companies are required to disclose details about their company applicants to FinCEN under specific conditions:
  • A domestic reporting company established or registered on or after January 1, 2024, must report information about its company applicant. (or)
  • A foreign reporting company established or registered to conduct business in the U.S. on or after January 1, 2024, must also disclose information about its company applicant.
Note: If the company does not satisfy the above-mentioned conditions, it is not required to report its applicant's details to FinCEN.

What are the two categories of company applicants?

The company applicants fall into two categories:
  • Direct Filer - The person is responsible for directly filing the papers or documents to register the reporting company with the secretary of state or similar office.
  • Directs or controls the filing action - The person is not directly involved in the filing process, but the person may be involved in directing or controlling the filing process with the secretary of state or a similar office.


What information is required from the company applicant?

When the reporting company qualifies to submit the company applicant details in the BOI report, the following information needs to be provided:
  • Full legal name
  • Date of Birth
  • Address (when the person prepares the documents to register the reporting company with the respective state needs to submit the complete and current business street address unless otherwise, the person should provide the residential address)
  • Unique identifying number
  • Image of an acceptable identification document (e.g., state driver's license or U.S. passport)
Those mentioned above are some notable information that needs to be provided by the company applicants.
Note: If the person already has the FinCEN Identifier, the person can provide the ID instead of giving all the information

What is FinCEN ID?

The FinCEN ID, also known as the FinCEN Identifier, is a unique identification number that the Financial Crimes Enforcement Network (FinCEN) issues to individuals or reporting entities.
After submitting the necessary information, FinCEN immediately issues the number.

The FinCEN Identifier contains 12 digits of a sequence of numbers.
  • For individuals such as company applicants or beneficial owners, the number starts with "3," followed by the remaining 11 digits.
  • For the reporting companies, the number must start with "2" followed by the remaining 11 digits.
If the company applicant has already obtained the FinCEN ID, provide it instead of giving personal information such as name, date of birth, and address.
While the FinCEN Identifier is not required in the BOI report, it simplifies the BOI reporting process.

How to obtain the FinCEN ID?

Starting from the tax year 2024, individuals or reporting companies can request the unique identification number from FinCEN.
To obtain the ID, follow the below-mentioned steps:
  • Visit the official website of FinCEN
  • Enter the essential information in the respective fields.
Once all the required information has been submitted to FinCEN, the individual or reporting companies can receive the unique identification number immediately.
If a company needs to request a FinCEN identifier after submitting its initial report, it can submit an updated report solely for that purpose.

Note: The FinCEN Identifier will not change even if the information is updated.

Conclusion

In summary, identifying and reporting the company applicant is a fundamental requirement for businesses established or registered on or after January 1, 2024.
Companies can comply with the legal frameworks by understanding who qualifies as a company applicant and the detailed information they must provide.
This ensures the transparency and integrity of the business formation process.
Following the guidelines discussed in this article will help businesses fulfill their reporting obligations effectively, ensuring they are fully prepared for the requirements set forth by FinCEN.