BOI Reporting

Beneficial Ownership Information

The introduction of Beneficial Ownership Information (BOI) reporting requirements, effective from January 1, 2024, under the Corporate Transparency Act (CTA), significantly influences U.S. businesses, especially smaller ones. This represents a notable shift towards more inclusive government reporting for smaller entities.

FinCEN BOI logo

BOI Reporting Overview

BOI reporting requires specific domestic and international entities, established through filing with a secretary of state or a similar state office, to submit a BOI report to FinCEN. This directive affects over 32 million businesses, with an emphasis on small businesses previously exempt from such federal mandates.

Entities Obligated to Report

"Reporting companies," as termed by the legislation, encompass entities formed or registered from January 1, 2024, onward, as well as those pre-dating this threshold. These companies are mandated to file reports that disclose their beneficial owners and, in certain instances, the "company applicants" responsible for their formation or registration.

Defining Beneficial Owner and Company Applicant

  • Beneficial Owner: An individual who, either directly or indirectly, has substantial control over, or owns or controls a minimum of 25% of the ownership interests in, the company.

  • Company Applicant: The individual who files the formation or registration document for the company, or, if multiple parties are involved, the person mainly responsible for overseeing or managing the filing process. Typically, this role could be filled by a legal professional or an entity formation service.

Reporting Requirements

A BOI report must encompass:

  • Full names, birth dates, addresses, and identifying numbers (like passport or driver’s license numbers) of each beneficial owner and company applicant.

  • Copies of the identification documents for each individual.

  • The legal name of the reporting company, any trade names, its primary business address, jurisdiction of formation or registration, and its tax identification number.

Deadlines for Filing

The BOI report submission deadlines vary:

  • Entities formed or registered between January 1, 2024, and January 1, 2025, must file within 90 days of their establishment.

  • Entities existing before January 1, 2024, need to file before January 1, 2025.

  • Entities established on or after January 1, 2025, have a 30-day filing window post-creation or registration.

Updating and Correcting Reports

Reporting companies must amend their BOI reports within 30 days of any changes to the reported data or upon realizing any inaccuracies.

No Annual Reporting

Unlike some federal requirements, BOI reporting doesn't necessitate annual submissions. Companies are only required to file an initial report and subsequent corrections or updates as needed.

Filing Process

BOI reports are filed electronically via a secure system on FinCEN’s website, designed for ease of use and data security.

Exemptions from Reporting

Twenty-three entity types are exempt from BOI reporting, including publicly traded companies, many nonprofits, and "large operating companies" that meet certain criteria, such as having over 20 full-time U.S. employees and grossing over $5,000,000 in sales or receipts.

Access to Filed Reports

BOI reports are accessible to federal, state, local, and tribal officials, as well as specific foreign officials for authorized activities. With the reporting company's consent, financial institutions can also access these reports for due diligence.

Penalties for Non-Compliance

Failure to comply with BOI reporting can result in substantial penalties, including daily fines, substantial monetary fines, and possible imprisonment. The civil penalty for a violation is $500 per day, while criminla penalties include fines of up to $10,000, imprisonment for up to two years, or both.

Further Information

For more information on this topic, or to learn how Tarraf & Associates can help, contact our team.