Beneficial Ownership Information Report

(BOI REPORT)

File Your BOI Report

Starting from January 1, 2024, a recently enacted law will enforce the submission of the Beneficial Ownership Information (BOI) Report. This mandate necessitates the disclosure of comprehensive details about a company’s beneficial owners to the U.S. Department of Treasury’s Financial Crimes Enforcement Network, commonly known as FinCEN.

In 2021, the Corporate Transparency Act (CTA), 31 U.S.C. 5336, was approved by Congress and is set to become operational on January 1, 2024. Applicable to both existing and newly established entities, its primary goal is to institute consistent reporting standards for businesses, aiming to counteract tax fraud, money laundering, terrorism financing, and other unlawful activities.

Which businesses are required to submit BOI Report?

  • Domestic Reporting Companies: Corporations, Limited Liability Companies (LLCs), and any other entities registered in any state in the U.S.
  • Entities that are not created by the filing of a document with a Secretary of State or similar state office are not required to report BOI, which includes most Trusts, Sole Proprietorships and General Partnerships.
  • The requirement is only applicable to small businesses which are defined as business that either earn less than $5 million in gross receipts or have fewer than 20 full time employees in the United States.
  • Foreign Reporting Companies: Entities formed within and under the law of a foreign country which also registered to do business in the U.S. by the filing of a document with a secretary of state, or any similar State or Tribal office, in the U.S.

Penalties for Noncompliance:

Willful noncompliance will carry a civil fine of up to $500 per day, each day after the entity’s deadline to file, and jail time of up to 2 years.

Who is Exempt?

FinCEN identified 23 company types that are exempt from filing BOI Reports:

1. Securities reporting issuer

2. Governmental authority

3. Bank

4. Credit union

5. Depository institution holding company

6. Money services business

7. Broker or dealer in securities

8. Securities exchange or clearing agency

9. Other Exchange Act registered entity

10. Investment company or investment adviser

11. Venture capital fund adviser

12. Insurance company

13. State-licensed insurance producer

14. Commodity Exchange Act registered entity

15. Accounting firm

16. Public utility

17. Financial market utility

18. Pooled investment vehicle

19. Tax-exempt entity

20. Entity assisting a tax-exempt entity

21. Large operating company

22. Subsidiary of certain exempt entities

23. Inactive entity

Conditions for “Inactive Entity” Exemption:

To be considered an Inactive Entity, it must meet all conditions:

  1. Is not engaged in active business.
  2. Was registered before January 1st, 2020. If registered on or after this date, the entity must file a BOI Report regardless of activity
  3. Is not owned by a Foreign Person, a person who is not a US Citizen, or not a US Resident
  4. Is not owned by a partnership, corporation, or other estates and trust.
  5. Has not experienced any change of ownership in the preceding 12-month period.
  6. In the preceding 12-month period, the entity has not sent or received any funds in an amount greater than $1,000, either directly or through any financial account that the entity had an interest in.
  7. Does not hold any assets, whether in the USA or abroad, including any ownership in any corporation, LLC, or a similar entity.

When Do You Need to Report?

  • Companies registered before 01/01/2024: Must file by 01/01/2025
  • Companies registered on or after 01/01/2024: Must file within 90 days of the formation date
  • Updates: If there is a change to any of the information previously reported, an updated report must be filed no later than 30 days after the date of the change.
  • If you have updated any of the following details:
  • Alteration in beneficial ownership.
  • Modification in the name, address, or unique identifying number of the beneficial owner.
  • The company attains a new status that exempts it from submitting a BOI Report.
  • Corrections: If a BOI Report was filed with inaccurate information, you must file a corrected report no later than 30 days after the date your company becomes aware of the inaccuracy.
File Your BOI Report

What Information Needs to be Reported?

Company Registration Details:
  • Legal Name
  • DBA/Trade Names
  • Current Street Address of Principal Place of Business in the US
  • State or Jurisdiction of Registration
  • Taxpayer ID Number (EIN)
Beneficial Owners Information:

For each Beneficial Owner, defined by individuals with greater than 25% ownership or those with substantial control:

  • Individual’s Name
  • Date of Birth
  • Residence Address
  • Identifying Number of an acceptable government-issued ID, such as a Passport or Driver’s License, and the name of the issuing state or jurisdiction
  • Image of an acceptable government-issued ID
Company Applicant Information:

Only companies formed on or after January 1, 2024 need to report Company Applicant information.

A Company Applicant is the individual who directly submits the application for the entity’s formation to the Secretary of State and the individual who is primarily responsible for directing this registration.

You can list a maximum of 2 individuals as Company Applicants for an entity.

  • Individual’s Name
  • Date of Birth
  • Residence Address
  • Identifying Number of an acceptable government-issued ID, such as a Passport or Driver’s License, and the name of the issuing state or jurisdiction
  • Image of an acceptable government-issued ID

Who is a Beneficial Owner?

An individual who either owns or controls a substantial percentage of the Company’s ownership (25% ownership or greater), or exercises substantial control over the Company.

Ownership Interests
  • Individuals that own or control at least 25% of the Company’s ownership interests, including shares of equity, stock, voting rights, or any other mechanism used to establish ownership.
Substantial Control

An individual in any of the 4 categories below exercises “substantial control” of the Company:

  • A senior officer (such as a President, CEO, Manager, COO, General Counsel, etc).
  • Has the authority to appoint or remove officers or directors.
  • Important decision-makers of the company’s nature, scope, product offering, geographies, finances, sale of assets, compensation structure, amendments to governance docs, etc.
  • An individual with any other form of substantial control over the company
Beneficial Owner Exceptions

The following are exceptions and are not included in the class of Beneficial Owners and therefore do not have to report that individual as a beneficial owner to FinCEN:

  • Minor children
  • Nominees, intermediaries, custodians, and agents
  • Employees
  • Inheritors
  • Creditors

Who Gets Access to The BOI Report?

  • BOI information will not be publicly searchable.
  • Federal, State, local and Tribal officials who submit a request through a US Federal government agency, will be able to obtain BOI reports for authorized activities.
  • Financial institution regulators will have access to BOI reports when they are assessing a financial institution’s compliance with CDD requirements.
  • Financial institutions will be able to request and receive BOI, however, only with the consent of the Reporting Company, and these requests will be required to be specific to an individual Reporting Company; they will not be able to request open-ended queries.
File Your BOI Report

What is a FinCEN Identifier?

Individuals can apply for a unique FinCEN Identifier to use instead of listing their personal information on every report. This is convenient for individuals whose information will be repeatedly used when filing BOI Reports.

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