BOI Reports: What You Should Know
This article aims to help you understand the beneficial ownership information reporting requirements, its implications, and how to navigate it responsibly.
As a Limited Liability Company (LLC) owner, you’re probably aware of the financial and legal obligations that keep your business afloat. One of these requirements is the Beneficial Ownership Information Report (BOI report). Enacted by the Corporate Transparency Act (CTA), the BOI report intends to prevent money laundering and other financial crimes by increasing transparency into the ownership of business entities.
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The Financial Crimes Enforcement Network (FinCEN) oversees this law and asks that LLCs and other companies declare the company’s beneficial owners.
A beneficial owner is an individual who either directly or indirectly:
- Has substantial control over a reporting company such as:
- A senior officer like a CEO or person in a similar leadership role.
- A person who can unilaterally appoint or remove senior officers or the majority of the board.
- A person who directs or determines important decisions.
- Owns or controls 25% or more of a reporting company’s ownership interests.
Who has to report?
The BOI reporting rule applies to all domestic and foreign reporting companies (formed under the law of a foreign country that have registered to do business in the United States) operating in the United States. This includes LLCs, corporations, and other businesses formed by filing a document with a U.S. government office, such as the Secretary of State.
Exemptions
Twenty-three total categories of exclusions relieve a company from the BOI requirement. You can find a table listing these exemptions on the FinCEN website.
Some common exemptions include:
- Companies with more than 20 full-time employees in the United States, make over $5,000,000 in gross receipts and possess a physical office there.
- Companies that are tax-exempt under specific categories of the Internal Revenue Service (IRS) 501(c) code.
- Subsidiaries of exempt holding companies like insurance companies, accounting firms, banks, and credit unions.
BOI reporting deadlines
The deadlines for submitting reports depend on the formation date of the LLC.
- If your company was established before January 1, 2024, you must file before January 1, 2025.
- For companies registered during 2024, the deadline for filing is 90 days from the notification of the company’s creation or registration.
- From 2025, companies will only have 30 days to submit their report.
- After filing the initial BOI report, you must file an updated report to inform FinCen of any beneficial ownership changes in 30 days.
Penalties for non-compliance
Failure to comply with the BOI reporting requirement can result in penalties, and intentional violations can lead to civil penalties and criminal charges.
The IRS can impose fines of up to $500 per day; criminal penalties could be up to two years imprisonment and a fine of up to $10,000.
Why this requirement was brought in
The report highlights business ownership and control to combat financial criminal activity.
By mandating disclosure of those with substantial control, regulators can gain insight into identifying financial crimes and shell company abuse.
Greater transparency around beneficial ownership gives law enforcement vital information to safeguard the financial system’s integrity and national security.
How to file a BOI report
The BOI report can be filed through the FinCEN BOI e-filing platform.
- Visit the FinCEN BOI e-filing platform.
- Select your filing type: “Initial,” “Correct Prior Report,” or “Update Prior Report.”
- Enter the date.
- If desired, request a FinCEN Identifier to simplify future filings.
- Provide basic company information, including the Employer Identification Number (EIN) and contact details of all owners or controlling parties.
- Supply proof of identification by uploading an image of a valid I.D., such as a passport or driver’s license.
- Once all fields are correctly filled, submit the documents online.
You can also download a PDF that you can complete offline at your own pace. Once you have completed the PDF, you must submit it online.
Information required
The report requires the submission of both personal and business information.
Here’s an overview of the required information:
Company information
- Full legal name, including any trade name or “DBA” name
- Current street address
- Jurisdiction of Formation
- Taxpayer Identification Number (EIN, SSN, or ITIN)
- Company applicant (If a reporting company is created or registered on or after January 1, 2024)
Owner information
- Full legal name, along with any aliases or maiden names
- Date of birth
- Complete current address
- A unique identifying number from a valid identification document (U.S. passport, state-issued driver’s license, or a foreign passport if none of the former are available), accompanied by an uploaded image of the document
FAQs
Is my BOI report information secure?
FinCEN.gov stores the information in a secure, non-public database accessible only by authorized law enforcement agencies, intelligence agencies, and certain financial institutions. FinCEN is a bureau of the United States Department of the Treasury.
Do all states have to file a BOI report?
Yes, the BOI reporting requirement is enforced under federal government regulations.
How do I request a FinCEN Identifier?
You can obtain a FinCEN ID number as you file the report. Doing so will allow you to enter the number in the future, reducing the information you must manually enter.
Who can be held liable for violating BOI reporting requirements?
If you fail to file the report and comply with the new rule, the company and its owners could face civil or criminal penalties.
What is the maximum criminal penalty for intentionally not filing?
The maximum criminal penalty is up to 2 years in prison and a $10,000 fine.
Do other legal entities have to file a BOI report?
Yes, other legal entities formed by filing registration documents with a state or federal office, such as corporations, may need to file BOI reports unless they meet specific exemption criteria. Exempt entities are sole proprietorships, general partnerships, and joint ventures.
What is a company applicant?
A company applicant is a person who has filed documentation, such as articles of organization, to formally register or incorporate with a legal entity at the state or federal level.
As a single-member LLC, do I need to submit my information as the beneficial owner?
Yes, as the sole owner, you would be considered the beneficial owner and must provide your identification details.
Do companies owned by individuals from foreign countries need to file BOI reports?
Foreign reporting companies registered to operate in the U.S. must disclose their beneficial owners, even if those individuals reside in another country. The same requirements apply regardless of the owners’ nationalities or countries of residence.
How does the BOI report benefit small business owners?
The BOI report enhances the integrity and transparency of the business environment, making it easier for small businesses to establish trust in the business world.
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