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On January 1, 2024, new beneficial ownership reporting guidelines took effect as part of the Corporate Transparency Act<\/a> (CTA). Going forward, many small business entities must report beneficial owner information to FinCEN or risk penalties and fines. If you\u2019re wondering, \u201cWhat is a beneficial owner?\u201d 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.<\/p>\n\n\n\n As the name implies, a Beneficial Ownership Information report (BOI report) generally provides details<\/a> about the owner(s) and individuals who control a company.<\/p>\n\n\n\n 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.<\/p>\n\n\n\n Let\u2019s consider an example. Abby, Bob, and Champion LLC own ABC LLC equally. Champion LLC has one member, Jeff, who owns 100% of the business.<\/p>\n\n\n\n Under the CTA, Abby and Bob are direct owners of ABC because each has a stake in the business greater than 25%.<\/p>\n\n\n\n Jeff is an indirect owner because he is considered to own more than 25% of ABC due to his ownership of Champion LLC. <\/p>\n\n\n\n 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.<\/p>\n\n\n\n Now, let\u2019s talk about what constitutes control of a company. When we say \u201ccontrol,\u201d 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.<\/p>\n\n\n\n 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\u2019s information.<\/p>\n\n\n\n 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<\/a>.<\/p>\n\n\n\n Read our educational article to learn more about the Corporate Transparency Act<\/a>.<\/p>\n\n\n\n All domestic business entities<\/a> created by registering with a state will be subject to the Corporate Transparency Act (CTA). This includes corporations<\/a>, LLCs, limited partnerships, and limited liability partnerships (LLPs), to name a few. Foreign businesses filing with any state are also subject to the CTA.<\/p>\n\n\n\n Sole proprietors<\/a> 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.<\/p>\n\n\n\n Initially, FinCEN estimated that more than 32 million businesses<\/a> must report Beneficial Ownership Information in the program’s first year.<\/p>\n\n\n\n Two main categories of business entities are exempt from Corporate Transparency Act (CTA) requirements.<\/p>\n\n\n\n File your Beneficial Ownership Information Report with Block Advisors<\/p> Now that you know who a beneficial owner is, let\u2019s 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:<\/p>\n\n\n\n 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.<\/p>\n\n\n\n For example, Jill from Jill\u2019s Auto LLC hired her friend Shay\u2019s law firm to fill out all the required paperwork to form the business. Shay\u2019s assistant drafts the documents and files them with Shay\u2019s approval. In this situation, Shay and his assistant are both company applicants. Jill must include their details when she provides information to FinCEN.<\/p>\n\n\n\n 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.<\/p>\n\n\n\n You may file a BOIR using the FinCEN online portal or a third-party service, such as the Block Advisors Beneficial Ownership Information Reporting<\/a> service, to file Beneficial Ownership Information (BOI).<\/p>\n\n\n\n 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.<\/p>\n\n\n\n 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.<\/p>\n\n\n\n For entities created before January 1, 2024, FinCEN recently pushed back the BOIR deadline to January 13, 2025<\/mark><\/strong> (see update above). Initially, the report was due by January 1, 2025. No reports were accepted before January 1, 2024.<\/p>\n\n\n\n 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\u2019s 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. <\/p>\n\n\n\n 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<\/mark><\/strong>, 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<\/mark><\/strong> from their original filing deadline to file their BOI report. <\/p>\n\n\n\n Businesses created or registered on or after January 1, 2025, subject to BOI reporting guidelines, have 30 days<\/mark><\/strong> to file their initial BOIR report with FinCEN after receiving actual or public notice that their creation or registration is effective.<\/p>\n\n\n\n Reporting companies that qualify for disaster relief (e.g., hurricanes<\/a>) may have a deadline different from the ones listed above. Deadline extensions will vary. Visit the FinCEN website <\/a>to determine the BOIR due date for disaster-impacted regions. <\/p>\n\n\n\n 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<\/a>, will vary.<\/p>\n\n\n\n NOTE: As of March 2025, the U.S. Treasury Department\u00a0announced<\/a><\/strong>\u00a0it will not enforce any penalties or fines associated with BOI reporting under existing deadlines, including FinCEN\u2019s most recently announced March 21 deadline. The announcement also shared that it will not impose any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after forthcoming rule changes expected from the FinCEN take effect. The information below reflects the original penalties that are no longer in effec<\/em>t.<\/p>\n\n\n\n The penalties for failure to comply<\/a> 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:<\/p>\n\n\n\n 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.<\/p>\n\n\n\n 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. <\/p>\n\n\n\n Please note that fine amounts may be adjusted annually for inflation.<\/p>\n\n\n\n If you\u2019re reading this article, you\u2019re 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\u2019s right for you.<\/p>\n\n\n\n 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.<\/p>\n\n\n\n Learn more about the Business Ownership Information Reporting service >><\/a><\/p>\n\n\n\nWhat is a Beneficial Owner Report?<\/h2>\n\n\n
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<\/figure>\n<\/div>\n\n\nWho are Beneficial Owners?<\/h2>\n\n\n\n
Who controls a business?<\/h3>\n\n\n\n
What is the Corporate Transparency Act (CTA)?<\/strong><\/h2>\n\n\n\n
What business entities must share beneficial ownership information?<\/strong><\/h2>\n\n\n\n
What business entities are exempt from beneficial owner reporting?<\/strong><\/h2>\n\n\n\n
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Keep your small business compliant with the Corporate Transparency Act<\/h3>
What information is included in the BOI report?<\/strong><\/h2>\n\n\n\n
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What is a company applicant?<\/strong><\/h3>\n\n\n\n
Company Applicant Example<\/h4>\n\n\n\n
Who is required to report company applicants?<\/h3>\n\n\n\n
How is Beneficial Ownership Information reported?<\/h3>\n\n\n\n
When is the Beneficial Ownership Information report due?<\/h2>\n\n\n\n
When is the BOIR due for companies created before 2024?<\/h3>\n\n\n\n
When is the BOIR due for companies created in 2024?<\/h3>\n\n\n\n
When is the BOIR due for companies created in 2025 and beyond?<\/h3>\n\n\n\n
My company was impacted by a disaster – when is my BOIR deadline?<\/h3>\n\n\n\n
How much does it cost to file a Beneficial Owner report? <\/strong><\/h2>\n\n\n\n
What penalties may be incurred for not filing a BOI report?<\/strong><\/h2>\n\n\n\n
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What should I do now?<\/strong><\/h2>\n\n\n\n
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