A beneficial owner is any individual who meets at least one of the following criteria. If you’re reading this and you’re a business owner, it’s probably you:

1. Owns 25% or More of the Company:
   • If a person holds at least 25% of the ownership interests in a company, they are considered a beneficial owner. Ownership can be direct (owning the shares) or indirect (through another entity that owns the shares).
2. Exercises Substantial Control:
   • A person who has substantial control over the company’s operations or decisions, even if they don’t own 25%, qualifies as a beneficial owner. This could include managers, directors, or individuals with significant influence over key decisions​​.

Who is NOT Considered a Beneficial Owner?

Not everyone associated with a company qualifies as a beneficial owner. Here are some exceptions:

• Minor children, as long as their parent or guardian's information is reported instead.
• Nominees or agents who are acting on behalf of someone else.
• Employees who don’t have substantial control or own significant shares.
• Creditors of the company, unless they meet ownership or control criteria​​.

Do Beneficial Owners Have To Be People?

A beneficial owner must be a human individual, not a company or other entity like a trust.

Although a company or legal entity can own shares in another company, only individuals behind that entity can be reported as beneficial owners. If a company holds ownership, the individuals who ultimately control that company (the beneficial owners of that company) must be reported​​. For entities like trusts who control a company, you would report who controls the trust as the beneficial owner(s).

Why It Matters

Understanding who is considered a beneficial owner is crucial because companies must report this information to the Financial Crimes Enforcement Network (FinCEN) to comply with the CTA. This law helps fight financial crimes by ensuring that authorities can identify the real individuals behind companies, preventing bad actors from hiding behind layers of corporate structure.

For more details on beneficial ownership and CTA filing requirements, visit FinCEN or review FinCEN’s Small Entity Compliance Guide.