Do you have minor children who are owners of an entity? Did you know that if they have at least 25% equity in a corporation that they are considered a beneficial owner? Do you want to know how you can avoid submitting their information to Fincen?
The Corporate Transparency Act requires reporting of Beneficial Owners, and there has been a lot of confusion around this topic. If you are unsure if you must report, be sure to tune in to the series of topics to learn if your entity is a reporting company, how to identify beneficial owners, how you can exclude minor children from reporting, and must trustees of entities submit information.
Recently I did a podcast episode on the Corporate Transparency Act and the required beneficial ownership reporting which covers information you need to know to determine how to report. If you’d like to tune in to hear the details, a link is included in the description of this video.
But you may be wondering what to do if a minor child holds at least 25% ownership of an entity. I’m happy to let you know that there is a Minor Child Exception. This rule allows for special reporting when a minor child is a beneficial owner of a company. Let me share the details with you.
Definition and Criteria
First, who is considered a minor child? It depends on the law of the state or Indian tribe where the company was created or registered. If your beneficial owner is a minor, instead of their information, you’ll report the details of the parent or legal guardian.
Reporting Requirements
Here’s what you need to do:
Indicate in the BOI Report that the information is for the parent or legal guardian of a minor child.
Once the child reaches the age of majority as defined by the relevant state or tribe, you must update the BOI report with their own information if they continue to be a beneficial owner.
Purpose and Compliance
Why does this exception exist? It’s all about protecting the child’s privacy while ensuring regulatory compliance. By reporting the parent’s or legal guardian’s information, regulatory bodies get the necessary control and ownership infomation without involving minors directly.
Reporting Through a Parent or Legal Guardian
If the beneficial owner is a minor, report the parent’s or guardian’s details. This includes:
Full legal name
Date of birth
Residential street address
Unique identifying number from an acceptable ID (like a passport or driver’s license)
Why This Exception Exists
This rule protects children’s’ privacy and ensures compliance. It provides necessary control and ownership information without directly involving minors.
Practical Steps for Reporting Companies
Identify Beneficial Owners: Check if any beneficial owners are minors.
Collect Required Information: Gather the necessary details about the minor’s parent or guardian.
File the BOI Report: Include the parent or guardian’s info and clearly indicate this substitution.
Update Upon Reaching Majority: Monitor the minor’s age and update the report when they reach the age of majority.
This approach ensures you comply with BOI regulations while protecting the privacy and rights of minors involved in business ownership.
If you’d like to listen to the full podcast episode I shared discussing all the details of the Beneficial Ownership Information Reporting, a link is in the description.
If you need assistance filing the Beneficial Ownership information report, we can help! You can reach us at 310-534-5577 or [email protected].
Failing to file a report on time can be costly. If you’d like to hear all of the information on the reporting requirements, a link to my podcast episode is in the description. And if you have any additional questions, be sure to reach out to us!
In the next video, I’m going to explain what to do if you are a trustee of an entity and do not hold any ownership of a company. Must you report? Be sure to listen to learn if you fall under the requirement to submit your information as a beneficial owner.
Beneficial Ownership Minor Child Exception
