Beneficial Owner Information (BOI) Report - What, Who, When, Where?

As of January 1, the Corporate Transparency Act (CTA) came into play, introducing a fresh federal filing obligation for numerous business entities, including corporations, limited liability companies, limited partnerships, and certain other entities.

All non-exempt business entities must submit a Beneficial Owner Information (BOI) report to the Financial Crimes Enforcement Network (FinCEN), the Treasury Department’s financial intelligence unit.

These reports are a must, unveiling the identities and contact details of the entity’s "beneficial owners." These owners are individuals who either hold 25 percent of the entity's ownership interests or exercise significant control over it.

If the company was formed before January 1^st 2024, that business owner will have until January 1^st 2025 to file the BOI. If the company is formed after January 1^st of 2024, they are required to file the BOI within 90 days of receiving notice that the registration is effective (meaning the registration with the Secretary of State). Business owners will have 90 days in 2024 to file but only 30 days for any businesses created in 2025.

In your BOI report, ensure to include comprehensive details for each beneficial owner:

• Full legal name
• Date of birth
• Complete current residential address
• A distinct identifying number from a valid U.S. passport, state/local ID, driver’s license, or foreign passport (if none of the former are available)
• An image of the document containing the unique identifying number

To manage this information, FinCEN will establish the Beneficial Ownership Secure System (BOSS), an exclusive database aiding law enforcement in preventing misuse of anonymous shell companies for illegal activities like money laundering and terrorism. These reports won’t be accessible to the public.

The CTA pertains to business entities formed by filing documents with a state secretary of state or similar official. Additionally, it applies to foreign entities conducting business within the U.S.

Exemptions under the CTA cover larger businesses meeting specific criteria, such as having 20+ employees and $5 million in receipts. It also excludes heavily regulated entities like publicly traded corporations, banks, insurance companies, and nonprofits.

Notably, sole proprietors and general partnerships in most states are exempt, but single-member LLCs fall under the Act's purview.

Remember, the initial BOI report filing is a one-time task; however, it's crucial to maintain updated reports. Any changes must be reported to FinCEN within 30 days. Changes include a new driver’s license or passport due to expiration, change of address to beneficial owner, changes in ownership interests (such as sale of ownership), change in CEO, change in name for beneficial owner, etc.

Non-compliance could lead to severe consequences, including substantial fines and potential imprisonment of up to two years. Stay informed and ensure your business meets the CTA requirements to avoid these penalties!

Not sure if you are required or where to go from here? We can help! Click this link to take a free quiz to find out if you are required. If you are looking for help in filing, click here.