BOI Basics: Understanding Beneficial Ownership

Beneficial Ownership (BOI) refers to the individuals who ultimately own or control a company, even if their names aren’t listed in the official company registration documents. In other words, a beneficial owner is the person who benefits financially from the company’s operations or holds significant decision-making power. A beneficial owner is typically a person who:

• Owns 25% or more of the company’s equity or shares.
• Exercises significant control over the company’s operations or finances.
• Has the ability to hire, appoint or remove key management personnel.
• Benefits from the company’s profits, assets, or voting rights.

The primary goal of BOI regulations is to increase corporate transparency and combat financial crimes such as money laundering, tax evasion, terrorist financing, fraud and corruption. By identifying the true individuals behind a business, government agencies and financial institutions can prevent illegal financial activities from operating in the shadows.

As a payroll company, we know that understanding the financial and ownership structure of your business is critical for managing employee compensation, tax reporting, and benefits administration. Ensuring BOI compliance means more accurate payroll and tax filings, reduced risk of fines and penalties and greater financial transparency.

Under the Corporate Transparency Act (CTA), businesses in the United States are required to disclose beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). This includes LLCs, Corporations, and Limited Partnerships. Certain entities are exempt. We encourage you to learn more about BOI reporting by visiting the FinCEN website at https://fincen.gov/boi and staying informed. Consequences of non-compliance can result in fines, criminal penalties and reputational damage. Maintain BOI compliance by filing accurate reports, monitor and update changes in ownership structure, and manage evolving requirements.

Payentry personnel management professionals provide expert support in payroll, workforce management, human resources, benefits administration, and retirement planning services.

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* MPAY LLC dba Payentry (Company), is not a law firm. This article is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other Company materials does not create an attorney-client relationship. The Company is not responsible for any inadvertent errors that may occur in the publishing process.