The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) began accepting beneficial ownership information (BOI) reports on January 1, 2024. In light of new standards and guidelines, here’s a quick look at beneficial ownership reporting requirements and how to comply with them.
What Is Beneficial Ownership Information, and Why Must a Business Report It?
“Beneficial ownership” defines the persons or entities who directly own or control a company’s business operations. Congress passed a law to ensure transparency in identifying these parties to make it more difficult for rogue individuals to profit through shell companies or other illegal schemes.
When Do I Report My Beneficial Ownership Information?
If your company launched before January 1, 2024, you have until January 1, 2025, to file your first BOI report. Companies that launch in 2024 have 90 days after active registration to file their BOI reports. Companies launching on or after January 1, 2025, will have 30 days to report going forward.
How Do I Report My Company’s Beneficial Ownership Information?
You can use the BOI E-Filing System on the FinCEN website to file a secure BOI report for your business. You can also access a clean form at that site.
Who Can File a BOI Report?
You can designate anyone working at your company — yourself, your co-owner, an employee, or a service provider — to file a BOI report on your business’s behalf. You may consult a CPA to help with the report, but working with an accountant is not required to complete the form.
What Kinds of Companies Must File a BOI Report?
For BOI reporting purposes, businesses are divided into domestic and foreign reporting companies. Any U.S. corporation, limited liability company, or business formed by notifying a state or Indian tribe must file a BOI report. Businesses with foreign origins that are registered to do business in the U.S. must also comply with reporting requirements.
A total of 23 business types are exempt from BOI reporting rules — primarily banks, credit unions, government authorities, some utilities, and finance-related entities. Sole proprietorships are also exempt.
How Do I Learn and Stay Aware of New Reporting Requirements?
Along with its Small Entity Compliance Guide, FinCEN promises to update reporting requirements on the BOI information page of its website.
Who Is a Beneficial Owner?
FinCEN identifies a beneficial owner as a party who:
- Has “substantial control” over a company, or
- Owns at least 25% of ownership interest
Typical employees who have “substantial control” are company presidents, general counsels, or officers like CFOs, CEOs, and COOs. They usually are the primary decision-makers on business structure, scope, and finances.
Ownership interest includes assets like equity, stock, capital, profits, and other financial instruments that can be converted into those assets.
What Other Information Am I Required to Report?
In a BOI report, the company’s designated filer must report:
- The company’s legal name and any DBAs
- Current physical address
- Company Tax Identification Number (TIN)
- Jurisdiction of company formation
- Beneficial owner’s name, address, contact info and TIN
Filers may be required to show approved forms of identification, such as a U.S. driver’s license or passport.
Do I Have to File a Report Every Year?
No. Companies only need to update their BOI when the information changes.
Where Can I Find More Information About BOI Reporting?
The FinCEN website contains more complete information about beneficial ownership reports.