Beginning January 1, 2024, small business owners must follow the new, mandatory ownership reporting requirements enacted by Congress.

It’s important for business owners to understand and comply with these reporting requirements in order to avoid costly fines. In today’s post, I’ll explain everything you need to know before submitting your company’s Beneficial Ownership Information (BOI) report.

What are the new Beneficial Ownership Information (BOI) rules and reporting requirements?

Basically, Congress and the federal government are trying to crack down on money laundering, tax evasion, and other illegal activity that is often hidden behind the guise of running a small business. To stop these types of criminal activities, Congress passed the Corporate Transparency Act (CTA) that called upon the Financial Crimes Enforcement Network (FinCEN) to create Beneficial Ownership Information (BOI) reporting rules (the feds sure do love their acronyms!).

Here’s the important part for business owners: These new BOI rules, which go into effect in January 2024, require small to medium-sized businesses and corporations (more on exactly who in a minute) to provide a BOI report to the U.S. Department of the Treasury or else pay expensive fines for not doing so.

This BOI report will provide the government with basic information about who is running (and benefitting from) each business.

Which businesses must comply with the Beneficial Ownership Information (BOI) rules?

FinCEN refers to any company that must file a BOI report as a “reporting company.” A reporting company can be a domestic or foreign corporation, limited liability company (LLC), or other business entity that was either created or registered to do business in the United States by the “filing of a document with a secretary of state or any similar office in the United States.”

However, some large companies are not mandated to provide a BOI report. If a company meets all of these requirements, then it qualifies as a “large operating company” and is not mandated to file a BOI report:

  • Has 20 or more full-time employees who are employed in the United States,
  • Has a physical office in the United States, and
  • Filed a Federal income tax information or return in the previous year with more than $5 million in gross receipts or sales from within the United States.

Additionally, there are currently 23 types of business entities that are also exempt from BOI reporting. These include banks, credit unions, insurance companies, and accounting firms.

The bottom line here is that although my firm may be off the hook for this report, if you are a small or medium-sized business owner, then you more than likely need to file a BOI report.

Who is a beneficial owner?

A beneficial owner refers to any person who either directly or indirectly “exercises substantial control” of a reporting company and/or owns at least 25 percent ownership interest in a reporting company. Each reporting company will have at least one beneficial owner, but there is no limit to the number a reporting company can have.

What does “substantial control” over a company mean?

Any person who meets at least one of these criteria can be said to have “substantial control” over the company:

  • Is a senior officer,
  • Appoints or removes senior officers or directors,
  • Makes important decisions for the company, or
  • Has any other type of control over the company’s decisions involving business ventures, structure, or finances.

For example, in addition to the company’s owners, these people would likely have substantial control over a company and would therefore be classified as beneficial owners and required to be included on the BOI report:

  • Board Member
  • Chief Executive Officer (CEO)
  • Chief Financial Officer (CFO)
  • Chief Operating Officer (COO)
  • Director
  • General Counsel
  • Officer
  • President

Additionally, if a trust has at least 25% ownership in a reporting company, then trustees, beneficiaries, grantors, or other similar individuals may need to be included on the BOI report as well if they control the trust.

What do I need to include on a BOI report?

Luckily, the information you’ll include on the BOI report is mostly simple, basic information that you likely already have. However, it’s a smart idea to take a look at the list below and start gathering any information or copies of documents that you’ll need to complete the report.

  • Company information required on BOI report:
    • Legal name
    • Trade name or doing business as (DBA) name
    • United States address
    • State, Tribal, or foreign jurisdiction of formation
    • IRS TIN
    • IRS EIN
  • Beneficial owner and company applicant (if applicable) information that is required on the BOI report:
    • Legal name
    • Date of birth
    • Address (residence for beneficial owners or business address for company applicants)
    • Number, issuing agency, and image of one of the following non-expired documents:
      • United States passport
      • Driver’s license
      • Identification document issued by a state, local government, or tribe
      • Foreign passport (only if one of the first three documents can’t be obtained)

What is a company applicant?

This is where things may get confusing. A company applicant is the person who filed the document that created the company. The company applicant’s information needs to be included on the BOI report if the company was formed after January 1, 2024.

According to FinCEN, the company applicant is the person who physically or electronically filed the first company registration document with the secretary of state (or similar office). And, if there is another person who directed or controlled the filing or creation of the first company registration document, then they need to be included in the report as well.

Finally, there can’t be more than two company applicants submitted on the report.

How do I file a BOI report?

Beginning on January 1, 2024, companies who must file a BOI report can do so online through the FinCEN website.

When does my business need to file a BOI report?

If your company was created or registered as a business before January 1, 2024, you have until January 1, 2025, to file your BOI report with FinCEN.

If your company was created or registered as a business after January 1, 2024, and before January 1, 2025, you have 90 calendar days after receiving notice that your company has been created or its registration is effective before your BOI report is due.

If your company is created or registered as a business after January 1, 2025, you have 30 calendar days after receiving notice that your company has been created or its registration is effective before your BOI report is due.

Company Start Date BOI Report Due
Before Jan 1, 2024 Jan 1, 2025
Between Jan 1, 2024, and Jan 1, 2025 90 days after the official company start date
After Jan 1, 2025 30 days after the official company start date

How often does my company need to file a BOI report?

The palatable part of this report is that as long as you don’t have any changes or corrections to make, then you don’t need to submit or update this information more than once.

However, if you need to make changes to your BOI report, then you have 30 days after the change happens in order to submit an updated report. You also have 30 days after determining something you submitted was inaccurate to submit a corrected report.

Additionally, you do not have to submit a report if your company closes or dissolves.

Who can I contact with questions about BOI reporting?

You can contact FinCEN representatives directly by:

What is the penalty for not submitting a BOI report?

If a business doesn’t submit a BOI report before the applicable deadline, sizable fines and civil and criminal penalties can apply to the senior officers of the business. Businesses can be fined up to $500 per day in civil penalties for not reporting!

If the business intentionally provides false or fraudulent information, those involved can face up to two years in prison and up to a $10,000 fine.