Beneficial Ownership Information Reporting Requirements

Beginning January 1, 2024, the majority of small businesses will be required to file an online report with the federal government. Established by the Corporate Transparency Act (CTA) in an attempt to prevent tax fraud, corruption, money laundering, and other illegal activities, this new reporting mandate requires companies to disclose information about who is running them.

The Beneficial Ownership Information (BOI) reporting requirements are estimated to impact 32.6 million existing companies, as well as an additional 5 million new entities each year. That’s a lot of paperwork! All LLCs, Corporations, and domestic or foreign entities initiated by filing with a secretary of the state, or equivalent office, will be required to file.

Let’s break Beneficial Ownership Information down into terms that are easy to understand.

Key takeaways

• Beneficial Ownership Information Reports should contain information about beneficial owners and company applicants
• The new reporting requirements took effect on January 1, 2024
• Existing companies must submit their initial Beneficial Ownership Information Report by January 1, 2025
• Any Beneficial Ownership Information reported to the U.S. Department of the Treasury Financial Crimes Enforcement Network (FinCEN) will not be a part of a publicly accessible database
• The CTA only requires you to file an initial report, as well as updated and corrected reports as needed

Overview of the Beneficial Ownership Information Reporting Rule

The Corporate Transparency Act (CTA), which kicked into gear back in 2021, was crafted to help crack down on any illegal activities that may be taking place behind the scenes of business operations. In December of that same year, the first draft of the Beneficial Ownership Reporting Information requirements were rolled out in an effort to implement the CTA.

With the latest update, your Beneficial Ownership Information Report will contain information about your business, as well as two categories of individuals: beneficial owners and company applicants.

What is a beneficial owner?

A beneficial owner is an individual who owns or controls at least 25% of a company or has substantial control over the company.

Additionally, an individual may be considered a beneficial owner if they exercise substantial control in any of the following capacities:

• They are a senior officer (CEO, COO, or President)
• They have the authority to appoint or remove specific offers or a majority of directors of the reporting company
• They make important decisions for the business, finance, or structure of the reporting company

What is a company applicant?

A company applicant is an individual who directly files or is primarily responsible for the filing of the document that creates or registers the company. This cannot be an entity; it should be an individual person or persons.

Your Beneficial Ownership Information will not be made public, and can only be accessed by federal agencies, the Department of Treasury, state and local law enforcement agencies, and in certain cases, financial institutions.

Who needs to file a Beneficial Ownership Information Report?

As mentioned earlier, any domestic or foreign company created by the filing of a document with a secretary of the state, or a similar office, is required to file.

These include:

• Limited Liability Companies (LLCs)
• Corporations
• Limited Partnership
• S Corporation
• C Corporation

However, if you fall under one of the following approved exemptions, you do not need to file a Beneficial Ownership Information Report.

Who is exempt from reporting?

There are 23 types of entities that are exempt from the Beneficial Ownership Information Reporting requirements. Entities that are exempt include nonprofits, government entities, certain large companies (like banks), and publicly traded companies that meet specific criteria.

Solo entrepreneurs who have not filed any official documents with the secretary of state are not required to not file.

What information needs to be reported?

All reporting entities must include the following when filing a Beneficial Ownership Information Report:

• Company legal name and trade name or DBA
• Company address
• The jurisdiction in which it was formed or first registered, depending on whether it is a domestic or foreign company
• Company Taxpayer Identification Number (EIN or SSN/ITIN)

Additionally, any individual who is considered to be a beneficial owner or company applicant will need to provide the following information:

• Legal name
• Birthdate
• Current address (this can be a company address or a residential address)
• An identifying number from a passport, driver’s license, or other approved document, as well as an image of that document

If any of the aforementioned information changes after filing your initial report, you are required to file an updated Beneficial Ownership Information Report with FinCEN within 30 calendar days.

How and when to file your Beneficial Ownership Information Report

It is free to file your BOI report through FinCEN’s online portal. You can use the same portal to file any updated or amended reports, as well.

Here are some important due dates to be aware of:

• Existing companies (those formed before January 1, 2024) must submit their initial Beneficial Ownership Information Report by January 1, 2025.
• Newly created companies (those formed on or after January 1, 2024) have 90 days from their inception to file their reports.
• If the company is formed on or after January 1, 2025, it must submit the Beneficial Ownership Information Report within 30 days of receiving confirmation of registration.

So, for example, if you registered your startup on February 3, 2021, you'd need to submit your initial Beneficial Ownership Information Report by January 1, 2025. However, if your company was formed on February 1, 2024, your initial Beneficial Ownership Information Report is due on May 1, 2024.

Are there penalties for not filing?

There are, and they can be pretty steep.

Non-compliance may result in you facing civil or even criminal penalties. Until it is remedied, you may face civil penalties of up to $500 per day. Criminal penalties may include up to two years in prison and/or up to $10,000.

Examples of violations include intentionally not filing a BOI report, knowingly submitting false beneficial ownership information, or neglecting to correct or update previously reported beneficial ownership details.

Next steps

If you still have questions about the Beneficial Ownership Information Reporting Rule, you can find more information at fincen.gov/boi-faqs. Additionally, you may want to seek guidance from an expert who can better assess your situation and direct you accordingly.

For beneficial owners who are looking for a U.S. residential address to use for your BOIR, consider TruResidence. TruResidence is VPM’s new luxury home address solution offering a long-term U.S. address to help you manage mail and maintain personal accounts.

With all the elements in place you can go to the next step-by-step guide to fill out the BOIR.