The purpose of this reporting is to provide greater transparency about who owns businesses and to crack down on financial crimes like money laundering, fraud, and trafficking, among others.
This guide takes a closer look at what a BOI report is, who needs to file one, what information to include, how to file a report, and more.
What Is Beneficial Ownership?
A BOI report is a document that offers details about a company and those who have beneficial ownership in it. According to FinCEN, beneficial ownership relates to anyone who owns at least 25% of a company or has substantial control of it.
Substantial control means that an individual is a senior officer (president, chief financial officer, chief executive officer, etc.), an important decision-maker, or has the power to remove/appoint officers and directors within the company.
However, there are some situations where a person is exempt from beneficial ownership rules altogether. This includes:
If they’re a minor child under the law of the state
If they act as a nominee, custodian, or agent for the beneficial owner (such as their tax professional)
If they're an employee whose economic benefits and their control within the company is dependent on their employment status. However, senior officers aren’t exempt.
If they have only a “future interest” in the company (such as being set up to inherit it at some point)
If they’re a creditor of the business
What Information Is Included in a BOI Report?
A BOI report includes several details about both a company and its beneficial owners. For the business itself, you’ll need to provide
The legal business name
Any trade or “doing-business-as” names
The street address of your business
The state or jurisdiction where it was created
The Taxpayer Identification Number (TIN)
When it comes to the beneficial owners, you’ll have to share their
Full name
Date of birth
Address
An identifying number from an ID document (such as a driver’s license or passport) accompanied by an image of the ID.
Businesses that were created on or after January 1, 2024, also have to provide information about their company applicant(s). This is the person or people who actually filed the documents that registered or created your company.
The information you need to share about company applicants is the same as for beneficial owners.
Who Has Access to the Information in a BOI Report?
FinCEN only permits certain individuals and organizations to view the information in these reports. This includes law enforcement, state/local officials, and foreign officials who submit a request to the US government. Financial institutions and the regulators of these institutions can also access the information if they get consent from the company itself.
The information isn’t available to the public.
Who Needs To File a BOI Report?
Any LLC, corporation, or other business entity registered in the US has to file a BOI report. Also, foreign companies formed under the law of another country but registered to do business in the US need to file a BOI report.
Businesses can authorize anyone to file on their behalf, such as an employee, owner, or a trusted third party like an accountant or lawyer. Companies required to submit a BOI report are normally called reporting companies.
Is Anyone Exempt From Filing a BOI Report?
Some companies are exempt from filing a BOI report—for example, sole proprietors.
Other types of businesses that don’t need to file a BOI report include
Banks
Credit unions
Government authorities
Securities reporting issuers
Depository institution holding companies
Money services businesses
Securities brokers/dealers
Securities exchanges or clearing agencies
Other Exchange Act registered entities
Investment companies or advisors
Venture capital fund advisors
Insurance companies
State-licensed insurance producers
Commodity Exchange Act registered entities
Accounting firms
Public utilities
Financial market utilities
Pooled investment vehicles
Tax-exempt entities
Companies that help a tax-exempt entity
Subsidiaries of certain exempt entities
Inactive entities
Large operating companies (businesses that have at least one physical operating location, and more than 20 full-time employees that are employed in the US)
If you’re unsure if your company qualifies for an exemption, you should reach out to a professional, such as a certified public accountant, to seek advice.
How To File a BOI Report
You can file a report online using the secure online filing system on FinCEN’s website. There’s no fee for applying and the process is straightforward. It only takes a few minutes as long as you have the right information on hand.
Begin by going to the website, clicking “File BOIR,” and choosing the online filing method that works for you. This is either to fill out an online form or through a PDF. You need to have Adobe Acrobat Reader if you want to file the report via PDF.
Next, select the type of filing you’re making (initial report, update, etc.). After that, you’ll just need to move from tab to tab providing the necessary information to complete the forms.
Correcting or updating your report
If you find an error in your report after you’ve filed it, you have 30 days from the day you became aware of the mistake to correct it. Similarly, if there’s a change within your business that impacts the information provided in your report, you’ll need to update it within 30 days of the change taking place.
This could be a business name change, hiring a new CEO, or even a beneficial owner moving to another address. However, you don’t need to report changes such as switching preferred shares to common stock, as FinCEN isn’t concerned about the type of interest an owner has.
Also, if your business becomes exempt after you’ve already filed your initial report, you can update your report indicating that you’re no longer a reporting company.
BOI Reporting Due Dates
FinCEN began accepting reports on January 1, 2024, and didn’t allow for early filing.
If your company was in existence before January 1, 2024, you have until January 1, 2025, to file your initial report. But if your company was created in 2024, you have 90 days from when your business was officially registered to file the report. Companies created on or after January 1, 2025, will have 30 days to file a report.
There’s no need to report annually, but companies must submit updated reports when information changes.
What Are the Penalties for Not Filing a BOI Report?
If your business violates the BOI reporting requirements, you could be subject to civic penalties of up to $500 per day until the situation is rectified. You could also face criminal penalties, such as a fine of up to $10,000 and up to two years in prison.
Violations include failing to file a report at all, filing false information on purpose, or failing to properly update or fix previous reports that are now incorrect.
Both individuals and companies can be held liable for these violations. This includes the person filing the false information as well as anyone providing that person with incorrect information to report.
It’s therefore important to stay on top of this reporting and ensure you’re providing the correct information by the due date.
Conclusion
BOI reports help the government understand who owns businesses. They also help prevent numerous types of financial crime. If you operate or have an interest in a business in the US, you need to be aware of them.
Most companies have to file a report, but several kinds of businesses are exempt. If you’re required to file one, make sure to do it correctly and on time to ensure you aren’t hit with fines or other penalties. Filing online is easy and only takes a couple of minutes.
