As we approach the end of 2024, the U.S. Department of the Treasury and Financial Crimes Enforcement Network requires an additional housekeeping item.
What is the BOI?
In 2021, Congress passed the Corporate Transparency Act (CTA) as part of the National Defense Authorization Act. This Federal Law requires businesses to disclose information about their owners and beneficial owners to the Financial Crimes Enforcement Network (FinCEN). In September 2022, FinCEN put the requirement of a Beneficial Ownership Information report (BOI) in place.
The original requirement had an effective date of January 1, 2024. It stated a reporting company created on or after the effective date had 30 calendar days to complete the BOI report. In September of 2023, that rule was amended, and the deadline was extended to the new regulation that allowed 90 calendar days for businesses created during the 2024 calendar year and a year for any existing business or business that was made prior to 2024 to get the report filed with the FinCEN.
The current deadline is December 31, 2024. Not much discussion has been had around this new requirement, as many hoped there would have been court cases filed to overturn the new regulation. As of September 2024, no such case has been seen.
Why is a BOI required?
The CTA’s goal is to set clear federal standards, protect national security interests, and reduce financial crimes. Those crimes include, but are not limited to, money laundering, terrorist financing, corruption, and tax fraud. BOI reporting is just one piece in the attempt to collect information about those who own or control a company or business operating in the United States of America, either directly or indirectly.
Who needs to complete this report?
Any business registered with the Secretary of State is required to complete the BOI report. This report will include any type of foreign companies that are doing business in the United States and identifying information about anyone who directly or indirectly controls that company or has at least 25 percent ownership interest. Only one report per company is required.
If you are a sole proprietor or nonprofit, you may not need to file a BOI; however, if you file any paperwork with the Secretary of State to formally create a business, you will be required to complete the BOI report.
Who will have access to this data?
A comprehensive list of those with access to the information has yet to be specified, but it should be updated at a later date. We anticipate the information contained in the BOI report will be available to federal, state, and local governments. There is also some potential for it to be either available to or shared with law enforcement, foreign officials, and/or financial institutions.
Filing requirements
Reporting Companies fall into two types: domestic and foreign. Review the chart below from FinCEN.gov/boi-faqs
FinCEN’s Small Entity Compliance Guide for Beneficial Ownership Information Reporting includes the following flowchart to help identify a company as a reporting company (see Chapter 1.1, “Is my company a “reporting company”?”).
The Beneficial Ownership Information report is not an annual reporting requirement. Only once the initial report is filed will you be required to update the information. For instance, if there is a change in ownership, change in owner address, or other contact information, you will be required to submit an updated BOI within 30 days of the change.
Failure to either complete the BOI report by December 31, 2024 or update the BOI report within 30 days of a change will result in penalties being assessed. Businesses created after January 1, 2025, will have 30 calendar days from the official registration notification of your business – the letter from the Secretary of State – to file the BOI.
Who is Exempt from this requirement?
According to FinCEN, 23 types of entities are exempt from the BOI reporting requirements. The following chart can be located at FinCEN.gov/boi-faqs.
Exemption No. Exemption Short Title – THIS IS A CHART
1 Securities reporting issuer
2 Governmental authority
3 Bank
4 Credit union
5 Depository institution holding company
6 Money services business
7 Broker or dealer in securities
8 Securities exchange or clearing agency
9 Other Exchange Act registered entity
10 Investment company or investment adviser
11 Venture capital fund adviser
12 Insurance company
13 State-licensed insurance producer
14 Commodity Exchange Act registered entity
15 Accounting firm
16 Public utility
17 Financial market utility
18 Pooled investment vehicle
19 Tax-exempt entity
20 Entity assisting a tax-exempt entity
21 Large operating company
22 Subsidiary of certain exempt entities
23 Inactive entity
FinCEN’s Small Entity Compliance Guide includes this table and checklists for each of the 23 exemptions that may help determine whether a company meets an exemption (see Chapter 1.2, “Is my company exempt from the reporting requirements?”).
Businesses may also be exempt from this requirement if they only file documents with the federal government or a government agency to obtain an Employer Identification Number (EIN) from the IRS, a professional or business license, or a fictitious business name—a name used by the business that is different from its legal name.
If your business is inactive and you are not doing any business operations, you may also be exempt from filing. However, the following six (6) items must also be true:
- The entity was in existence prior to January 1, 2020.
- The entity is not engaged in any active business.
- The entity is not owned by a foreign individual or company (directly or indirectly, wholly or partially).
- The entity has kept ownership the same since January 1, 2023.
- Since January 1, 2023, the entity has not sent or received more than $1,000 through a bank account tied to that business.
- The entity does not hold any type of asset in the U.S. or abroad, including ownership in another business, corporation, LLC, or any other type of entity.
How to complete the form
This form does not have to be completed by a lawyer or accountant. Any business owner can complete the BOI on behalf of the company as long as they have access to the items listed below.
Before starting the BOI Report, please make sure you have the following items:
- The legal name of the company along with any alternate names (e.g., DBA, AKA, trade name) as registered with the Secretary of State
- You can add multiple alternate names.
- Tax identification type
- EIN (most common)
- SSN/ITIN
- Foreign
- Tax identification number
- Knowledge of the State where your business is registered
- Current U.S. business address
- Owner information (for each owner)
- Name
- Address
- Identification documents (for each owner with images)
- State-issued driver’s license
- State/local/Tribe-issued ID
- U.S. Passport
- Foreign Passport
- Contact information of the person completing the BOI report
To file the BOI report correctly, go to FinCEN.gov. Use the proper spelling to avoid phishing or spam sites.
- Midway down the home page, there will be four (4) circles. Under the BOI circle, select Beneficial Ownership Information to access the BOI landing page.
- Under File, located on the right side of the page, the first option is to File a report using the BOI E-Filing System.
- This link will take you to the BOI E-Filing System.
- Select Get Started.
- This report can be completed with Adobe Reader 8 or higher.
- We suggest filing the report electronically to avoid downloading forms and reuploading them later.
- Select Prepare & Submit BOIR
- You will receive a pop-up warning letting you know you are entering an official government site.
- Read through each question. Use the “Need help?” dropdown if needed.
*We suggest selecting box number 3 to obtain a FinCEN ID for future use.
For a more in-depth look check out our youtube video out BOI: Do you NEED to file?
If you need additional help or have any questions, Waterford Business Solutions is happy to help. Feel free to call us at 864-351-0852 or email us at Info@WaterfordBusiness.com.
