What is a Beneficial Owner?

A beneficial owner is someone who has control or ownership of a company. According to the Financial Crimes Enforcement Network (FinCEN), a person is a beneficial owner if they:

Have “substantial control,” directly or indirectly, over a company

Own or control at least 25% of a company

Basically, if a person has significant influence on company decisions, they’re considered a beneficial owner. Companies will have at least one beneficial owner but could have more.

What is Beneficial Ownership Information Reporting?

A Beneficial Ownership Information (BOI) report is a new federal filing requirement. Starting January 1, 2024, most businesses in the U.S. are required to submit this report. This report requires information about your company, your company’s beneficial owners, and in some cases, your company applicants.

This new filing is a part of the Corporate Transparency Act (CTA). This federal law was passed in order to help prevent and crack down on money laundering, tax fraud, terrorist financing, and other financially-focused illicit activity.

Who is Required to File a BOI Report?

Most private businesses in the United States are required to file a BOI report with FinCEN. If you own a corporation, LLC, or another entity created by filing a document with a Secretary of State (or similar local office), Indian tribe, or a foreign authority you are likely required to file a BOI report.

There are some exceptions to this rule. Sole proprietorships, general partnerships, and any other business entities created without a government filing don’t need to file a BOI report. Some other entities are also exempt because they either belong to an already highly regulated industry, have an obvious presence in the U.S., or are inactive. FinCEN does not require a BOI report from:

  • Securities issues
  • Domestic government authorities
  • Banks and domestic credit unions
  • Bank holding companies and savings and loan holding companies
  • Registered money transmitting businesses
  • Broker-dealers
  • Securities exchange or clearing agents
  • Other Exchange Act registered entities
  • Registered investment companies and advisers
  • Venture capital fund advisers
  • State-regulated insurance companies
  • State-licensed insurance producers
  • Commodity Exchange Act registered entities
  • Public accounting firms
  • Public utilities
  • Financial market utilities
  • Pooled investment vehicles
  • Tax exempt entities
  • Entities assisting tax exempt entities
  • Large operating companies
  • Subsidiaries of exempt entities
  • Inactive entities

Large operating companies are also exempt if they meet all of these requirements:

  • The company has 20 or more full-time employees working in the United States.
  • The company has a operating presence at a physical office in the United States. (This does not include a residence or shared space unless that space is shared with affiliates.)
  • The company filed a tax return in the previous year that reports more than $5 million in gross receipts or sales sourced from the United States.

How do I File a BOI Report?

BOI reports are filed with FinCEN electronically through the FinCEN website. New businesses must file a BOI report within 30 days from formation or registration (or 90 days if the business was formed within the 2024 calendar year). Businesses formed before 2024 have until 2025 to file.

As of now, FinCEN is still developing their online filing system. There is no filing fee for BOI reports.

What Information do I need to Provide on a BOI Report?

You need to provide information about the company and its beneficial owners. Companies formed on or after January 1, 2024 will also need to provide information about their company applicants. The specific information required is explained below:

1

Company Information

FinCEN requires some general information about your company on your BOI report.

Type of Report

Choose from:

Initial, Correction, Update, or a New Exempt Entity.

Entity Name

The legal company name registered with the state, as well as any DBAs or Trade Names.

Tax ID

This can be an Employer Identification Number (EIN), Social Security Number (SSN), or an Individual Taxpayer Identification Number (ITIN).

Jurisdiction of Formation

Where your business was formed. Usually a state, but could also be a similar local office, tribe, or an equivalent foreign authority.

Entity’s U.S. Address

You must include the address of your company’s principal place of business. If your company is located outside the US, you’ll include the address where the company conducts business in the US. FinCEN will not accept P.O. Boxes, virtual addresses, registered agent addresses, or other third party addresses.

2

Beneficial Owner Information

Beneficial owners include anyone with substantial control over the company and anyone who owns or controls 25% or more of the company. You must provide the following for each of your company’s beneficial owners:

  • Full legal name
  • Date of birth
  • Residential address
  • Identification

You will need to submit a photo of each beneficial owner’s identification. The photo of the identification needs to show the ID number, the jurisdiction where it was issued, and the ID photo.

Accepted Forms of Identification

  • A state-issued driver’s license
  • State, local, or tribe-issued ID
  • U.S. passport
  • Foreign passport
3

Company Applicant Information

Companies formed on or after January 1, 2024 also need to list their company applicants. Companies can have up to two company applicants:

  • the individual who directed or controlled the filing
  • the individual who files the document that creates or registers a business

So, if you decided to start a company and hired a lawyer to do the actual filing, you would have to provide your information and your lawyer’s information. If you filed your own company yourself, you’d only need to provide your information.

You need to provide the same information for both company applicants and beneficial owners, including a photo of an accepted form of ID.

What Should I look For in a BOI Filing provider?

Like with other important business filings, some business may prefer not to file a BOI report themselves. Business formation companies, lawyers, registered agents and similar kinds of services may offer this filing. When choosing a service, you want to trust they can provide the following:

Security

Consider both physical security (does your lawyer have stacks of paperwork on the desk or an unlocked door?) and up-to-date technology for securely submitting your information.

Privacy

Some business filings services sell data to third parties. How a service handles your data can usually be found in the service’s Privacy Policy.

Timeliness

New company reports and updates for changes to company information must be filed within 30 days.

Expertise

Your provider should have knowledge and experience with business filings.

Low Cost

The BOI filing is free to file, so be wary of services charging hundreds of dollars to submit this filing.

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Frequently Asked Questions

Your BOI report due date depends on when you originally formed or registered your company.

  • Company formed or registered on or after January 1, 2024: Due within 30 days of forming or registering (extended to 90 days if formed within 2024 calendar year).
  • Company formed or registered before January 1, 2024: You have until January 1, 2025 to file your report.

There are some pretty hefty consequences if you fail to file a BOI report for your company. You can be charged up to $591 every day until you file your report (up to $10,000), imprisoned for up to 2 years, or both.

FinCEN does not require a filing fee to submit your report. You are also able to update, and correct your BOI report for free.

The information is submitted to FinCEN and available to local, state and federal agencies. However, your information is not available to the public.

A FinCEN identifier is a unique, identifying number that individuals and entities can be issued upon request. FinCEN will issue identifiers to to both individuals and reporting companies that have submitted their BOI to FinCEN. Individuals and companies will then be able to use this identifier on future BOI reports rather than having to list all of their personal information again.

Currently, there is no separate form to apply for a FinCEN identifier. Instead, there will be an option to apply for a FinCEN identifier on your BOI report.

If your business information changes, you will need to update your BOI report within 30 days of said changes. The same is true for beneficial owner and company applicant information as well.

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