In 2021, Congress passed the Corporate Transparency Act (CTA), which created a new requirement for companies to report beneficial ownership information. This 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.
Beneficial ownership information (BOI) refers to identifying information about the individuals who directly or indirectly own or control a company.
The CTA calls for a centralized database to house the BOI, which is maintained by FinCEN. Filing is free of charge and is a one-time requirement with a deadline of January 1, 2025.
How do I know if my company needs to report BOI?
Companies are only required to report BOI if they meet the definition of a “reporting company” and do not qualify for an exemption. There are two types of reporting companies:
- Domestic Company: A corporation, a Limited Liability Company (LLC), Other entity created by filing a document with a Secretary of State
- Foreign Company: A corporation, a Limited Liability Company (LLC), Other entity formed under the law of a foreign country that is registered to do business in the United States by the filing of a document with a Secretary of State
Companies that are not required to report BOI include:
- Non-Reporting Company: Entities that are not created by filing with a secretary of state, for example, sole proprietorships and certain trusts.
- Exempt Company: Securities reporting issuer, Governmental authority, Bank, Credit union, Depository institution holding company, Money services business, Broker or dealer in securities, Securities exchange or clearing agency, Other Exchange Act registered entity, Investment company or investment adviser, Venture capital fund adviser, Insurance company, State-licensed insurance producer, Commodity Exchange Act registered entity, Accounting firm, Public utility, Financial market utility, Pooled investment vehicle, Tax-exempt entity, Entity assisting a tax-exempt entity, Large operating company, Subsidiary of certain exempt entities, Inactive entity
Intentionally failing to report BOI may results in civil or criminal penalties. Civil penalties include up to $500 for each day that the violation continues. Criminal penalties include imprisonment for up to two years and/or a fine of up to $10,000. Senior officers of an entity that fails to file a required BOI report may be held accountable for that failure.
Who is a beneficial owner of my company?
A beneficial owner is any individual who, directly or indirectly exercises substantial control or owns or controls at least 25 percent of the ownership interests. There is no maximum number of beneficial owners who must be reported.
Any individual who owns or controls at least 25% of the Ownership Interests. This can include:
-
- Equity, Stock or Voting Rights
- Capital or Profit Interest
- Convertible Instruments
- Option or Privilege
Any individual who exercises Substantial Control over the company. This can include:
-
- Senior Officer
- Appointment or Removal Authority
- Important Decision-Maker
- Any other form of substantial control
Do I have to report company applicants?
Companies registered prior to January 1, 2024, are not required to register company applicants. Companies registered on or after January 1, 2024, must report company applicants. A company applicant can be up to 2 individuals.
- The individual who first filed the document with the secretary of state
- The individual who is primarily responsible for the document
What information is reported?
BOI reports require specific information about a company, its beneficial owners, and applicants.
Information required for a reporting company:
-
- Legal Name
- Any trade name or DBA
- Complete US address
- State, Tribal, or foreign jurisdiction of formation
- Internal Revenue Service (IRS) Taxpayer Identification Number (TIN)
- If a foreign reporting company has not been issued a TIN, report a tax identification number issued by a foreign jurisdiction and the name of such jurisdiction.
- State or Tribal jurisdiction of first registration (foreign reporting companies only)
Information required for each beneficial owner and applicant:
-
- Legal name
- Date of birth
- Complete current address
- Unique identifying number and issuing jurisdiction from, and image of, one of the following non-expired documents:
- US Passport
- State driver’s license
- Identification document issued by a state, local government, or tribe
- If an individual does not have any of the previous documents, a foreign passport
When do I have to file?
Companies registered prior to January 1, 2024, are required to file by January 1, 2025. Companies registered on or after January 1, 2024, have 90 calendar days after receiving notice of creation or registration to file its initial BOI report.
How do I file?
FinCEN has a secure filing system with complete instructions located at www.fincen.gov/boi.
How do I change my information?
Corrected reports are required when previously reported information was inaccurate when filed. Due within 30 calendar days of company becoming aware of inaccuracy. This includes any inaccuracy regarding the company, beneficial owners, or applicants.
Updated reports are required when there is a change to previously reported information about the company or its beneficial owners and are due within 30 days of the change. Examples of changes that would require an updated BOI report:
- Any change of information for the company, for example registering a new DBA.
- A change in beneficial owners or the death of a beneficial owner.
- Any change to a beneficial owner’s name, address, or unique identifying number provided in a BOI report.
- *This includes a new identifying document that expires and is renewed.
For more information about the Beneficial Owner reporting requirements, see Beneficial Ownership Information Reporting | FinCEN.gov
