Beneficial Ownership Information Report
FinCEN's BOI Reporting Requirements Simplified
Since the beginning of 2024, most businesses in the U.S. are required to file a Beneficial Ownership Information (BOI) Report with the government. The purpose of the BOI Report is to prevent money laundering and other financial crimes. Here's what you need to know.
What Is a Beneficial Ownership Information Report?
The BOI Report is a new step in starting and maintaining an American business. These reports gather personal information on businesses (and the people in charge of them) in an effort to make financial crimes harder to hide.
Similar to state formation paperwork, the BOI Report is a compulsory requirement for operating a limited liability company or corporation. Many larger enterprises are potentially exempt, but the majority of small businesses don’t qualify for the 23 exemptions specified in the CTA. Nonexempt businesses will need to file their BOI Report or face financial and legal penalties.
Before the Corporate Transparency Act, business information filing was at the discretion of the states. While businesses still have to follow their state’s specific rules, this is a new requirement entirely—it doesn’t take the place of anything you already have to do. Instead, it’s an additional step.
Let’s go over what you need to know to stay in compliance.
Who Is Included in the Beneficial Ownership Report Information?
There are three parties you have to report on: the reporting company, the company applicants, and beneficial owners. Let’s figure out who that is for your business.
The Reporting Company
Your reporting company is the business itself. You might call it a business entity, a company, “that place I would really like to take a vacation from but oh no the supplier is calling—” or something else, but the CTA calls it a reporting company. Unless you qualify for a BOI exemption, this is your business.
The reporting company is just a company that has to report. Catchy, isn’t it?
The Company Applicant
Your company applicant is the individual, or up to two individuals, who directed, drafted, and submitted your business’s formation documents with the state. This may be your organizer, but it may also be someone different .
For example, if you filed your own formation documents with the state, you are both the incorporator and the company applicant. However, if you hired a third party filing service to form your company for you, they are the incorporator, but you are likely still the company applicant.
This requirement is only for businesses formed on or after January 1, 2024. Businesses formed before the start date of BOI reporting don’t need to submit company applicant information.
Beneficial Owner
Your company’s beneficial owner is any person with a financial hold of at least 25% or who has significant control over the business’s operations. According to FinCEN, this includes individuals in the position of CEO, CFO, General Counsel, or anyone that has similar authority. You might have multiple beneficial owners, but there’s always at least one. (Note: this might not be the same person who is the company applicant.)
A business’ legal owner is usually the beneficial owner. But that’s not always the case. Particularly for larger corporations and businesses owned by public figures, there might be a “middle man” who acts as owner of the business, even if they don’t own the majority control. This person might be the beneficial owner, despite not actually owning the business. This is one of the reasons FinCEN wants to demystify the business formation process.
Do All LLCs Have a Beneficial Owner?
Yes. A beneficial owner is a person who owns 25% of the business, or a person who makes the important business decisions or exercises significant control over the business. This means that every LLC will have at least one beneficial owner.
Beneficial Ownership Reporting Exemptions
Since the purpose behind Congress’ CTA is to prevent financial crimes, there are reporting exclusions for businesses not deemed at risk. This is typically because there are already adequate reporting requirements for these types of businesses nation-wide.
Exempt entities include:
- Tax-exempt entities
- Large operating companies
- Inactive businesses
There are twenty-three types of BOI reporting exemption specifically listed in the CTA. In general, a business is likely exempt if they:
- employs more than 20 employees on a full-time basis in the U.S.
- filed last year’s federal income tax returns with over $5,000,000 in gross receipts or sales
- has an operating presence at a physical office within the U.S.
Many of these businesses have reporting requirements that already give the necessary information to governmental offices or, such as the case of inactive businesses, do not move money through the business.
Which Beneficial Owners Are Exempt From Reporting?
Generally speaking, beneficial owners are required to submit their information to FinCEN. However, there are a few exemptions.
These include:
- a minor child if parent or guardian information is reported
- anyone who is a nominee, intermediary, custodian, or agent on behalf of another individual
- an employee of a reporting company in specified circumstances
- anyone whose only interest in a reporting company is a future interest through a right of inheritance
- a creditor of a reporting company
Not sure if you qualify for exemption? Check with a business law attorney to confirm.
*This is informational commentary, not advice. This information is intended strictly for informational purposes and does not constitute legal advice or a substitute for legal counsel. This information is not intended to create, nor does your receipt, viewing, or use of it constitute, an attorney-client relationship. More information is available in our Terms of Service.
Beneficial Ownership Information Report Requirements:
Essentially, if the information can be used to legally identify you, FinCEN is interested in it. Think about answering security questions for your bank—things only you should know.
If you are a company applicant or beneficial owner, you’ll submit:
- Legal full name
- Date of birth
- Residential or business street address
- Personal identification document with unique identifying number. This requirement is limited to a valid state driver’s license, state ID, U.S. passport, or international passport.
Alternatively, you can file for a FinCEN Identifier, which is a new personal ID number used instead of the above information on your report.
Your business—the reporting company—files its:
- Legal name
- Any DBAs/trade names
- Street address
- Formation jurisdiction
- Taxpayer Identification Number, Social Security Number, or Employer Identification Number (EIN)
Altogether, this information is meant to give FinCEN a way to check who runs your business and what that business does.
Where Is my Beneficial Ownership Information Sent?
BOI Reports are submitted on FinCEN’s E-filing system. This is where all the information in the reports will live.
In the Corporate Transparency Act itself, the internal system is called the Beneficial Ownership Secure System, or BOSS. It is a cloud-based, private government server. According to FinCEN, the database will have the highest FIMSA (or security) level possible. It is not accessible to the general public, unlike the state databases you might be more familiar with.
Remember, the goal is to stop financial crimes and terrorism. So while your information is available to be pulled, the actual data sharing is meant to be limited to people interested in sussing out those crimes.
The only people who can see your report are:
-
- Federal law enforcement agencies
- State/local/Tribal law enforcement with a court order
- Federal agencies on behalf of a foreign country with international agreement
- Financial institutions for customer due diligence purposes with authorization from the reporting company
How to File a Beneficial Ownership Information Report
Below is our list of steps for completing your BOI Report.
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Most states require this information up front when you form your business, so your reporting company information should be easy to find if you don’t know it already. This information includes your reporting company’s legal entity name, trade names/DBAs, business address, jurisdiction of formation, and unique tax identification number.
This could be one person or several, so it’s a good idea to get this information ready to go prior to actually filling out the online report.
You’ll include the legal name, date of birth, residential/business address, and an identifying document with unique identifying number for every person that qualifies as a company applicant and/or beneficial owner. (Alternatively, you can submit a FinCEN Identifier for each individual.)
Remember, company applicant information is only required for businesses formed on or after January 1, 2024.
You can file your BOI Report through the online database or offline via PDF. The PDF requires the updated Adobe Reader to access, and you’ll need to upload that document through the same online system.
All the information submitted on your BOI Report will need to be updated regularly. For example, if your business changes addresses, you’ll need to update your reporting company information with FinCEN. If your business sells and gets a new majority owner, the beneficial ownership information will need to be changed.
You have thirty days to update your information once you or the reporting company becomes aware of the need for change. After that, there could be consequences. You update your BOI Report via the same online database you originally submmited the information on.
What Happens If I Forget to File?
We know you’re busy—but you’re going to want to remember this one. Not reporting (or misreporting) has a $591 per day fine, up to $10k. Worse, you could get two years imprisonment.
If you’re reading this knowing you misreported, don’t panic: you’ve got a safeguard for accidentally inaccurate submissions. Just report it voluntarily and correct the report within 30 days.
How Do I Get a Beneficial Ownership Report FinCEN ID?
A FinCEN Identifier Number is an unique identifying number available to individuals and reporting companies through FinCEN. You can use this number instead of submitting your personal information on your BOI Report. You can receive a FinCEN Identifier Number by submitting the same four pieces of information (legal name, date of birth, address, and an identifying document with unique identifying number) to FinCEN.
If you have multiple reporting companies and don’t want to share your information with each one, a FinCEN Identifier lets you give your reporting company all the information they need while still maintaining some privacy.
Your reporting company can also get a FinCEN Identifier, but not prior to the first BOI Report. It can be requested when you first file or any time after.
