Beneficial Ownership Information Reporting

***Update 3/22/25: FinCen issued an interim final rule on 3/21/25 that removes the filing requirement for U.S. companies and individuals. See FinCen's website for the final rule.***

**Update 2/18/25: The U.S. District Court decision reinstates the BOI reporting requirements setting a filing deadline of March 21, 2025. However, during the next month FinCen will assess its options to modify deadlines and reduce the reporting burden for lower-risk entities. More changes are expected**

*Update 12/5/24: A court ruling out of Texas this week issued a nationwide preliminary injunction on BOI reports. Reporting requirements are paused*

There is a new reporting requirement for small businesses. It is called the Beneficial Ownership Information (BOI) Report. Have you heard of it?

Given that this requirement is new, I want to provide a summary of what it is, who has to report, what gets reported, and the deadline for reporting. This summary will not cover all scenarios so if you have more questions you can reach out to me, your accountant or attorney, or view the Small Entity Compliance Guide.

Corporate Transparency Act

The Corporate Transparency Act (CTA) was passed by Congress in 2021. The purpose of the CTA is to help prevent financial crimes like money laundering, terrorist funding, corruption, and tax fraud. Under this new law, certain companies must report information about their beneficial owners and decision makers to the Financial Crimes Enforcement Network (FinCen). This reporting requirement went into effect on January 1, 2024.

Which Businesses Have to File the Report?

The reporting requirements apply to most small businesses that originally filed formation documents (think Articles of Incorporation or Articles of Organization) with the secretary of state or similar office. Many corporations and LLCs will meet this requirement. If you are a single-member LLC or small business owner, you will most likely need to complete the report.

If a business meets the requirements for filing, they are considered to be a “reporting company.”

There are 23 specific types of entities that are exempt from the reporting requirements. A few of those exemptions are: 

• Large companies with 20 full-time employees, a U.S. physical office, and more than $5 million in gross receipts. 

• Certain regulated companies like banks, insurance companies, or publicly traded companies.

• Tax exempt organizations (generally 501(c) organizations).

Who is a beneficial owner?

A beneficial owner is any individual who meets either of the following:

• Owns or controls, directly or indirectly, at least 25% of the ownership interests of the reporting company, or

• Exercises substantial control over the reporting company.

An individual has substantial control over the reporting company if they meet any of these:

• A senior officer,

• The authority to appoint or remove certain officers or a majority of the directors,

• An important decision maker, or

• Any other form of substantial control over the reporting company.

A beneficial owner does not include corporate or other entity owners.

There are five exceptions to the beneficial owner definition. One of those exceptions is a minor child. A minor child does not have to be reported as a beneficial owner, although the reporting company may instead report information about the child’s parent or guardian.

What Needs to be Reported?

The reporting company must provide the following information:

• Full legal name

• Any trade name or “doing business as” (dba) name

• Taxpayer identification number (or EIN)

• Current address (the physical place of business)

• State or jurisdiction of formation

The following information must be provided for each beneficial owner:

• Full legal name

• Date of birth

• Current residential address

• Unique identifying number and the issuing jurisdiction from one of these non-expired documents:

  • U.S. passport

  • State driver’s license

  • Identification document issued by a state, local government, or tribe

• An image of the document (from the above list) that was used on the form

There is an additional reporting requirement for companies formed in 2024 and thereafter. In addition to the items listed above, the reporting company will need to report information on its company applicant. There can be up to two company applicants. An applicant is:

1. The individual who directly files the document that creates or first registers the reporting company. This individual would have physically or electronically filed the document with the secretary of state or similar office.

2. The individual who is primarily responsible for directing or controlling the filing of the creation or first registration document.

When and How Do I Report?

Companies must submit their BOI report electronically through FinCen’s system at fincen.gov/boi. The filing deadline depends on which type of report you are submitting.

Initial Report

The deadline for filing your initial report depends on when your company was created.

• Companies created before January 1, 2024 must file by January 1, 2025.

• Companies created during 2024 must file within 90 calendar days of creation.

• Companies that are created in 2025 and beyond will have 30 calendar days from their creation date to file the initial BOI report.

***The February 18, 2025 court decision changed the filing deadline to March 21, 2025 for initial reports.***

Updated Report

Any changes in the company or beneficial ownership information must be reported within 30 days of the change. These changes can include a change in name, address, ownership, a minor child reaching the age of majority and no longer qualifying for the exception, and others. In addition, if information changes on an identifying document (passport or driver’s license), then a new image must be provided.

What if I Don’t File?

Failure to comply with the new BOI reporting requirements can result in significant penalties. The willful failure to file a report or the willful provision of false or fraudulent information, may result in penalties up to $591 per day and imprisonment.  

Next Steps

If your business was in existence prior to 2024, you need to take steps now to complete your initial filing by the deadline. If you want to complete the filing on your own, you will need to provide the information needed on FinCen’s website.

If you want someone to help you through the process and file your BOI report, I’m here to help. 

This requirement is new for everyone, and there’s some complexity in navigating the details. If you have questions or need assistance, don’t hesitate to reach out. Let’s ensure your compliance with these new requirements is smooth and as stress-free as possible! 

Stacey