Beneficial Ownership Information (BOI) Reporting Guide for Small Businesses
by Bradley Mix | June 4, 2024
Effective January 1, 2024, numerous established corporations, limited liability companies, partnerships, and similar entities are now obligated to adhere to federal regulations mandating the submission of specific personal information of their senior officers, controlling interest owners, or individuals wielding significant control to the Financial Crimes Enforcement Network, an arm of the U.S. Treasury Department (FinCEN). Initial filings must be completed and submitted to FinCEN by no later than January 1, 2025.
Reporting of Beneficial Ownership Information (BOI)
Beneficial Ownership Information Reporting (BOI) is a legal requirement necessitating businesses to reveal details regarding their ownership. This measure aids in combatting financial crimes such as money laundering and terrorism financing by requiring full disclosure regarding company ownership and control.
Definition of Beneficial Owner
According to the law, a beneficial owner typically refers to any individual who, either directly or indirectly, through contract, agreement, understanding, relationship, or any other means:
- Owns or controls 25% or more of an interest in the reporting company; or
- Exercises significant control over the reporting company (for instance, holding positions such as President, CFO, or LLC Manager).
A reporting company may have multiple beneficial owners. FinCEN anticipates that one or more individuals will substantially control each reporting company. Consequently, each reporting company should be capable of identifying and reporting at least one beneficial owner to FinCEN.
Small Business Reporting Obligations to FinCEN
All companies operating in the United States, including small businesses, must comply with BOI reporting requirements.
Required information reported to FinCEN
For each individual deemed a beneficial owner, a Reporting Company must provide the following details:
- Full legal name.
- Date of birth.
- Residential address.
- A “unique identifying number” from a driver’s license, passport, or other government-issued identification card.
- An image of the aforementioned identification card.
Additionally, a reporting company must disclose the following:
- The complete legal name of the Reporting Company.
- Any trade name or “doing business as” name.
- The current address, including the principal place of business in the United States or, in other cases, the primary location in the United States where business is conducted.
- The jurisdiction of formation.
- For foreign Reporting Companies, the State or Tribal jurisdiction of initial registration.
- The IRS Taxpayer Identification Number (TIN), which may include an Employer Identification Number (EIN) for domestic companies, or a tax identification number issued by a foreign jurisdiction for foreign companies, along with the name of the respective jurisdiction.
Special Reporting Rules
Special reporting rules may apply to the following:
- Exempt Entity Ownership: Report the names of exempt entities holding ownership interests.
- Minor Child Ownership: Information about minor child owners is not required; instead, provide details of their parent or legal guardian.
- Foreign Pooled Investment Vehicle: Report one individual with substantial control over the company.
Understanding the FinCEN Identifier
A FinCEN Identifier, provided by FinCEN, is a unique number that, while not mandatory, can replace certain required personal details in BOI reports. This substitution helps protect personal information.
Initial BOI Report Filing Deadlines
- For existing companies as of January 1, 2024: Submit by January 1, 2025.
- For companies established or registered between January 1, 2024, and January 1, 2025: File within 90 calendar days upon receiving notification.
- For companies established or registered after January 1, 2025: File within 30 calendar days upon receiving notification.
How to File
- File electronically through FinCEN’s secure filing system.
- Instructions and guidance will be available on www.fincen.gov/boi.
How to Update and Correct Reports
- Visit the FinCEN website’s Beneficial Ownership Information (BOI) portal: www.fincen.gov/boi.
- Log in to the secure filing system using your credentials.
- Navigate to the section for updating existing reports.
- Provide the updated information for any changes to company or owner details.
- Submit the updated report electronically through the secure filing system.
- Ensure that the submission is made within 30 days of the changes being implemented.
Exemptions from Beneficial Ownership Information Reporting:
The Corporate Transparency Act (CTA) offers exclusions for specific entities from the obligation to report beneficial ownership information. These exclusions cover various types of entities, such as publicly traded companies that meet specific qualifications, numerous nonprofits, and certain sizable operating companies. Below is an list of the 23 exemptions provided:
- Accounting firm
- Bank
- Broker or dealer in securities
- Commodity Exchange Act registered entity
- Credit union
- Depository institution holding company
- Entity assisting a tax-exempt entity
- Financial market utility
- Governmental authority
- Inactive entity
- Insurance company
- Investment company or investment adviser
- Large operating company
- Money services business
- Other Exchange Act registered entity
- Public utility
- Pooled investment vehicle
- Securities exchange or clearing agency
- Securities reporting issuer
- State-licensed insurance producer
- Subsidiary of certain exempt entities
- Tax-exempt entity
- Venture capital fund adviser
Understanding that exemptions are contingent on specific criteria, entities must diligently assess their eligibility before confirming exemption status. Additionally, discrepancies in state laws concerning the formation or registration of certain entity types, such as trusts, business trusts, or foundations, may impact reporting obligations. For comprehensive guidance on discerning reporting duties and exemptions, companies can consult the FinCEN’s Small Entity Compliance Guide.
Adherence to beneficial ownership information (BOI) reporting is imperative to avoid penalties and uphold transparency in business operations. Therefore, staying informed and fulfilling reporting obligations are essential contributions to fostering a safer financial environment.
Brad Mix
Consultants, Growth Acceleration Consultants, Manatee, Mix, SarasotaFlorida SBDC at USF
Specialty: Disaster Assistance, SBA Lending, Startup
Brad Mix has more than 20 years of experience in the financial services industry and as a business consultant. Prior to joining the Florida SBDC at USF, Mix provided consulting services to more than 2,500 businesses and assisted business owners in securing more than $100 million in capital and $60 million in government contracts. He has extensive experience with SBA loans, including 504s, Community Advantage loans, and microloans. In addition, he assists business owners in preparing business plans, financial projections, profitability improvement, business acquisitions, business valuations, marketing and capital solutions.