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  • Writer's pictureNels Larsen, CPA, CMA, CFM

Beneficial Ownership (BOI) Reporting: What you Need to Know

Updated: Jan 8




In 2021, Congress passed the Corporate Transparency Act on a bipartisan basis. This law is part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.

 

As of January 1, 2024 business owners must comply with the Corporate Transparency Act (CTA). This means that an initial report must be filed, known as the Beneficial Ownership Information (BOI) report, with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), as well as subsequent reporting when there are changes.

 

This is a US Treasury requirement, and although it is not completed as part of tax preparation and planning by Guidance Accounting, if you are interested in engaging us for questions and guidance or to file your report for an additional fee, let us know.

 


Who Must Submit a BOI Report?

 

Any reporting company* that is not specifically exempt are required to report.


A list of exemptions is listed further below in this article. FinCEN’s Small Entity Compliance Guide includes full details. Companies should carefully review qualifying criteria before concluding that they are exempt. 


A sole proprietorship is not generally considered a reporting company and therefore not required to file, unless it was created by filing a document with a secretary of state or similar office in the United States.


*Reporting companies include domestic as well as foreign entities registered to do business in the U.S. —i.e., any entity created or registered by the filing of a document with a secretary of state of a US state or similar office in the United States.

 


What is Required for Filing and How do I File?

 

Generally, reporting companies must provide four pieces of information about each beneficial owner:

  • name

  • date of birth

  • address

  • Identifying information


The company must also submit certain information about itself, such as its name(s) and address. In addition, reporting companies created on or after January 1, 2024, are required to submit information about the individuals who formed the company (“company applicants”).


If you are required to report your company’s beneficial ownership information to FinCEN, you will do so electronically through a secure filing system available via FinCEN’s BOI E-Filing website. FinCEN does not charge a fee for filing the form.

 


When does a BOI Report Need to be Filed?

 

Beneficial ownership information reporting is not an annual requirement. An initial report needs to be submitted, and subsequently only to update or correct information.

 

  • Existing companies: For reporting companies created or registered to do business in the United States before January 1, 2024 register is open now. The initial BOI report must be filed by the end of 2024.

  • Newly created or registered companies: Reporting companies created or registered to do business in the United States starting in 2024 have 90 calendar days to file after receiving actual or public notice that their company’s creation or registration is effective. A reporting company created or registered on or after January 1, 2025, will have 30 calendar days to file after receiving actual or public notice that its creation or registration is effective.

  • Changes: Reporting companies must file any changes to the information. Examples include:

    • Any change to a beneficial owner’s name, address, or unique identifying number previously provided to FinCEN. i.e. new driver’s license or other identifying document that includes a changed name, address, or identifying number. The reporting company also would have to file an updated beneficial ownership information report with FinCEN, including an image of the new identifying document.

    • Registering a new business name

    • A change in beneficial owners, such as a new CEO, or a sale that changes who meets the ownership interest threshold of 25 percent

 


What are the Penalties for not Filing?

 

Civil and criminal penalties can be levied for disregarding beneficial ownership information reporting obligations, as well as civil penalties of up to $500 for each day that the violation continues. That person may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000.

 


Are any Businesses Exempt?

 

23 types of entities are exempt from the beneficial ownership information reporting requirements. These entities include publicly traded companies meeting specified requirements, many nonprofits, and certain large operating companies. The following list summarizes the 23 exemptions.


  1. Securities reporting issuer

  2. Governmental authority

  3. Bank

  4. Credit union

  5. Depository institution holding company

  6. Money services business

  7. Broker or dealer in securities

  8. Securities exchange or clearing agency

  9. Other Exchange Act registered entity

  10. investment company or investment adviser

  11. Venture capital fund adviser

  12. Insurance company

  13. State-licensed insurance producer

  14. Commodity Exchange Act registered entity

  15. Accounting firm

  16. Public utility

  17. Financial market utility

  18. Pooled investment vehicle

  19. Tax-exempt entity

  20. Entity assisting a tax-exempt entity

  21. Large operating company

  22. Subsidiary of certain exempt entities

  23. Inactive entity

 

 FinCEN’s Small Entity Compliance Guide includes this table and checklists for each of the 23 exemptions. Companies should carefully review qualifying criteria before concluding that they are exempt. 




RESOURCES & LINKS

 

This guide walks small businesses through the requirements in plain language.


Videos and webinars, contact center, and more about how to report.


A comprehensive list of common questions as well as specific situations. .

 

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