Beneficial Ownership Information Report: Guide to BOI Reporting Requirements and Meaning for Business Owners

On January 1, 2024, new beneficial ownership reporting guidelines took effect as part of the Corporate Transparency Act (CTA). Going forward, many small business entities must report beneficial owner information to FinCEN or risk penalties and fines. If you’re wondering, “What is a beneficial owner?” read on to learn some important features of the new Beneficial Ownership Information (BOI) reporting requirements and what the new beneficial ownership rules may mean for your small business.

UPDATE | DECEMBER 24, 2024 – On December 23, a Federal Court of Appeals stayed the previous District Court injunction that halted enforcement of the Wednesday, January 1, 2025, deadline for Beneficial Ownership Information Reporting (BOIR). As a result, the BOI reporting deadlines initially set by FinCEN – including the January 1, 2025, deadline for reporting companies formed before 2024 – were reinstated. However, on December 24, FinCEN also granted specific extensions due to the short timeline for qualifying entities to comply. These extensions include:

• Reporting companies created or registered before January 1, 2024, have until January 13, 2025, to file their BOI report.
• Reporting companies created or registered on or after September 4, 2024, with a filing deadline between December 3 – December 23, 2024, have until January 13, 2025, to file their BOI report.
• Reporting companies created or registered on or after December 3, 2024, and on or before December 23, 2024, have an additional 21 days from their original filing deadline to file their BOI report.

What is a Beneficial Owner Report?

As the name implies, a Beneficial Ownership Information report (BOI report) generally provides details about the owner(s) and individuals who control a company.

Who are Beneficial Owners?

Under the Corporate Transparency Act (CTA), ownership includes those owning 25% or more of a company directly or indirectly. This includes stockholders, partners, LLC members, and owners of a business that owns another business subject to BOI reporting.

Let’s consider an example. Abby, Bob, and Champion LLC own ABC LLC equally. Champion LLC has one member, Jeff, who owns 100% of the business.

Under the CTA, Abby and Bob are direct owners of ABC because each has a stake in the business greater than 25%.

Jeff is an indirect owner because he is considered to own more than 25% of ABC due to his ownership of Champion LLC.  

Under the CTA, Abby, Bob, and Jeff are each considered beneficial owners. All three must include their information in the BOI report for ABC LLC.

Who controls a business?

Now, let’s talk about what constitutes control of a company. When we say “control,” in this case, we refer to people who either influence, directly or indirectly lead, or determine business decisions and choices. Generally, this includes the top senior officers and managers within a company.

Continuing the example above, ABC LLC hires Jim to manage and control day-to-day operations. Under the CTA, he would be considered in control of the business and, thus, a beneficial owner. The BOI report should include Jim’s information.

What is the Corporate Transparency Act (CTA)?

Congress passed the Corporate Transparency Act (CTA) as part of the Anti-Money Laundering Act in 2021 to help law enforcement flag and respond to financial crimes. This bill mandates many businesses to file a beneficial ownership information report to the Financial Crimes Enforcement Network (FinCEN). The stated purpose of this new requirement is to prevent malicious individuals from hiding their identities through shell companies.

Read our educational article to learn more about the Corporate Transparency Act.

What business entities must share beneficial ownership information?

All domestic business entities created by registering with a state will be subject to the Corporate Transparency Act (CTA). This includes corporations, LLCs, limited partnerships, and limited liability partnerships (LLPs), to name a few. Foreign businesses filing with any state are also subject to the CTA.

Sole proprietors and general partnerships are businesses not created by registering with any state and are not subject to the CTA. In addition, there are other exemptions explained below.

Initially, FinCEN estimated that more than 32 million businesses must report Beneficial Ownership Information in the program’s first year.

What business entities are exempt from beneficial owner reporting?

Two main categories of business entities are exempt from Corporate Transparency Act (CTA) requirements.

1. Federally regulated business entities, such as financial institutions, publicly traded companies, and insurance companies
2. Large business entities with at least 20 full-time employees, over $5 million in gross receipts, and a substantial U.S. presence

What information is included in the BOI report?

Now that you know who a beneficial owner is, let’s talk about what Beneficial Ownership Information (BOI) you need to share. The reporting company (your business) is required to submit an electronic form that includes the following information:

• A name, address, birth date, and a unique ID number for each beneficial owner
  • A unique ID number could be a driver’s license number or passport number
  • The unique ID may not be the owner’s social security number
• A name, address, registered agent, and tax ID number for the business
• Type of BOI filing (initial filing, correction, or update)
• For newly created businesses, information about company applicants (more on this in the next section)

What is a company applicant?

A company applicant is a person(s) who creates/registers entity formation documents with the state or is responsible for the person who does. This can be the business owner or another individual, such as an attorney or CPA. The Beneficial Ownership Information report can list up to two company applicants.

Company Applicant Example

For example, Jill from Jill’s Auto LLC hired her friend Shay’s law firm to fill out all the required paperwork to form the business. Shay’s assistant drafts the documents and files them with Shay’s approval. In this situation, Shay and his assistant are both company applicants. Jill must include their details when she provides information to FinCEN.

Who is required to report company applicants?

Only business entities created on January 1, 2024, or after must report information about company applicants. Business entities in existence before 2024 do not need to report company applicant information.

How is Beneficial Ownership Information reported?

You may file a BOIR using the FinCEN online portal or a third-party service, such as the Block Advisors Beneficial Ownership Information Reporting service, to file Beneficial Ownership Information (BOI).

Qualifying businesses are required to make one initial Beneficial Ownership report to FinCEN. Additional amended reports are required when there is a change to the information provided, such as a change in ownership or to correct a mistake. Generally amended reports are required within 30 days of the change.

When is the Beneficial Ownership Information report due?

The Beneficial Ownership Information report deadline for a qualifying business depends on when the company was created or registered. If you’re wondering, “When are Beneficial Ownership Information reports due?” keep reading. Below, we break down the various deadlines to help clarify the topic.

When is the BOIR due for companies created before 2024?

For entities created before January 1, 2024, FinCEN recently pushed back the BOIR deadline to January 13, 2025 (see update above). Initially, the report was due by January 1, 2025. No reports were accepted before January 1, 2024.

When is the BOIR due for companies created in 2024?

Generally, for businesses created on or after January 1, 2024, the report are due within 90 days from when the business receives notice that its registration is effective by the state. For example, Jill begins filing her LLC, Jill’s Auto LLC, on June 1, 2024. Jill received notice that the state approved her registration, effective June 5, 2024. In this case, Jill has 90 days, until September 3, 2024, to report the information to FinCEN and avoid penalties.  

However, there are a couple of exceptions. Reporting companies created or registered on or after September 4, 2024, with a filing deadline between December 3 – December 23, 2024, have until January 13, 2025, to file their BOI report (see update above). Reporting companies created or registered on or after December 3, 2024, and on or before December 23, 2024, have an additional 21 days from their original filing deadline to file their BOI report.

When is the BOIR due for companies created in 2025 and beyond?

Businesses created or registered on or after January 1, 2025, subject to BOI reporting guidelines, have 30 days to file their initial BOIR report with FinCEN after receiving actual or public notice that their creation or registration is effective.

My company was impacted by a disaster – when is my BOIR deadline?

Reporting companies that qualify for disaster relief (e.g., hurricanes) may have a deadline different from the ones listed above. Deadline extensions will vary. Visit the FinCEN website to determine the BOIR due date for disaster-impacted regions.

How much does it cost to file a Beneficial Owner report?

FinCEN does not charge anything to file the BOI report through their online portal. However, if you prefer to use a third-party filing service, there may be an associated cost. Fees for third-party services, such as Block Advisors Beneficial Ownership Information Reporting service, will vary.

What penalties may be incurred for not filing a BOI report?

The penalties for failure to comply with the Corporate Transparency Act are severe and something you should be aware of. There are three types of reporting violations that are subject to penalty:

1. Willful failure to file a report
2. Providing false information
3. Unauthorized disclosure of information

For failing to file a report or providing false information, individuals could be subject to a fine of $500 per day, up to $10,000, and up to 2 years in prison.

FinCEN Beneficial Ownership Information should only be available to authorized law enforcement agencies and financial institutions. The penalty for anyone with access to this information disclosing it without proper authorization is a fine of $500 per day, up to $25,000, and up to 5 years in prison. 

Please note that fine amounts may be adjusted annually for inflation.

What should I do now?

If you’re reading this article, you’re already headed in the right direction. We understand the urge to act quickly since the FinCEN Beneficial Ownership Information reporting system is live. You may also want to seek the advice of an attorney who can review your specific circumstances and inform your decisions to confirm that you are doing what’s right for you.

Overwhelmed by the process of filing? Unsure if you need to file to begin with? Block Advisors is here to help! Our Business Ownership Information Reporting service can help you determine the impact of the new compliance rules and decide the next move for your small business.

Learn more about the Business Ownership Information Reporting service >>

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This article is for informational purposes only and should not be construed as legal advice. You may want to seek the advice of an attorney to evaluate all relevant considerations.