Taylor Legal Blog

Who Would Be Considered a Beneficial Owner of this Business? [VIDEO]

Posted by Katherine L. Taylor, Attorney and CPA, Chief Problem SolverMay 13, 20240 Comments

{2.5 minutes to read}  Hi there. If you own or manage a business and do not know who is considered a Beneficial Owner for reporting those people and their information to the Federal agency under the Corporate Transparency Act (CTA), you are not alone. I'm Katherine Taylor, the lawyer for business owners, and in this article, I will explain what a Beneficial Owner is under the Corporate Transparency Act. 

A Beneficial Owner under the CTA is defined as follows: Anyone who directly or indirectly owns 25% of the ownership interest or exercises substantial control. As you can see, the phrase ''owns 25%” is relatively objective, but the phrase ''exercises substantial control” is decidedly subjective. The Corporate Transparency Act gives us a little more guidance as to what substantial control means, and that is a person who falls into any one of the following four categories:

1. That person is a senior officer of the company. 

2. That person can appoint a senior officer of the company. 

3. That person is an important decision-maker. 

4. The person has any other form of control. 

Again, we're talking broad swath types of definitions.

So, what does that mean to you and your company? If your company has an owner or owners, any of which owns 25% or more of the ownership interest, whether an LLC interest or a stock, that person is a Beneficial Owner. However, what if the company has a general manager? What if the company has officers — all those people in the C-suite positions, on the website? Those people could be deemed Beneficial Owners. As I said, a company general manager, a board member, and board members of corporations can all appoint officers. So, a broad range of positions and people fall under this definition. That means, each of them will have to report their personal identifying information to the company so that they can report that information to FinCEN. 

If you have questions, please give us a call. Our contact information is below, and you can go to previous videos where I've explained what a Reporting Company is. In the future, I will be recording videos to explain additional definitions in this confusing new Federal Act.