Lawyers, You Might Be A Company Applicant!

In addition to reporting the identities of a company’s owners, companies created or registered after January 1, 2024, are required to report the identities of their applicants. Applicants are broadly defined as the individual or individuals who caused the company’s creation documents to be filed with the secretary of state or similar office.

Companies created or registered after January 1, 2024 must identify at least one applicant and may be required to identify two applicants. Applicants can be “direct filers” or the individual who “directs or controls the filing action.”

This means that if a business owner hires a law firm or business filing service to file their articles of incorporation, articles of organization, registration of business trust, or other establishing documents, an individual (not an entity) from the law firm or business filing service must report as an applicant for that company. The individual who hired the law firm or business filing service must also report as an applicant because they directed or controlled the filing action.

All anonymous LLCs in states that allow them should have an applicant who is not a beneficial owner because anonymous LLCs utilize a third party to file their articles of incorporation to preserve the owners’ anonymity.

§5336 requires reporting entities to “… identify each beneficial owner of the applicable reporting company each applicant with respect to that reporting company …” FinCEN’s educational materials state that a company will only have a maximum of two applicants: (1) the individual who directly files the document that creates the entity, or in the case of a foreign reporting company, the document that first registers the entity to do business in the United States, and (2) the individual who is primarily responsible for directing or controlling the filing of the relevant document by another. Beneficial Ownership Information Reporting Rule Fact Sheet dated September 29, 2022. The educational materials and the text of the Rule appear to conflict in instances where multiple individuals qualify under one or both classes of applicants. Best practice is likely to report as many individuals who qualify as applicants as the FinCEN form will allow and to retain detailed records of the identifying information for any omitted applicant (full name, date of birth, mailing address, FinCEN or other identifying number.)

Note that the same logic applies to accountants, CPA’s, paralegals and any other professional or individual who may help direct or file the relevant paperwork to create or register a reporting company.