Business Law, Tax Requirements

Beneficial Ownership Information Form and Requirements

  • Most new as of 2024 businesses are required to file within 90 days of registering the company

  • Most new businesses starting January 1st, 2025 are required to file within 30 days of registering the company

  • Other businesses have until the end of 2024

  • Downloadable Form is at the end of this article

 

What is the Ben­e­fi­cial Own­er­ship Infor­ma­tion Form and Who Must File It?

In the evolv­ing land­scape of cor­po­rate trans­paren­cy and anti-mon­ey laun­der­ing efforts by the U.S. gov­ern­ment. Busi­ness own­ers have anoth­er report­ing form to add to the pile. 

Finan­cial Crimes Enforce­ment Net­work (Fin­CEN) has intro­duced sev­er­al reg­u­la­tions to increase account­abil­i­ty in the busi­ness sec­tor and with more reg­u­la­tions comes more forms. We now have what’s known as the Ben­e­fi­cial Own­er­ship Infor­ma­tion Form, which aims to help author­i­ties track the own­er­ship of cor­po­ra­tions and oth­er legal enti­ties.

What is the Beneficial Ownership Information Form?

The Ben­e­fi­cial Own­er­ship Infor­ma­tion (BOI) Form is a manda­to­ry fil­ing require­ment intro­duced as part of the Cor­po­rate Trans­paren­cy Act (CTA), which became law on Jan­u­ary 1, 2021. This Act man­dates cer­tain busi­ness­es to report infor­ma­tion regard­ing their ben­e­fi­cial own­ers. The pur­pose of the form is to enhance trans­paren­cy in the busi­ness sec­tor and pre­vent the mis­use of anony­mous com­pa­nies for ille­gal activ­i­ties such as mon­ey laun­der­ing, tax eva­sion, and financ­ing ter­ror­ism.

The Ben­e­fi­cial Own­er­ship Infor­ma­tion form is filed with the Finan­cial Crimes Enforce­ment Net­work (Fin­CEN), which is a bureau of the U.S. Depart­ment of the Trea­sury. This form requires busi­ness­es to dis­close iden­ti­fy­ing infor­ma­tion about indi­vid­u­als who have sig­nif­i­cant con­trol or own­er­ship of the enti­ty. The infor­ma­tion gath­ered is intend­ed to be kept con­fi­den­tial and will only be acces­si­ble by law enforce­ment agen­cies and oth­er autho­rized enti­ties.

What Information Must be Reported?

The BOI form col­lects spe­cif­ic infor­ma­tion about a company’s ben­e­fi­cial own­ers. Each ben­e­fi­cial own­er must pro­vide the fol­low­ing details:

  1. Full Legal Name
  2. Date of Birth
  3. Cur­rent Res­i­den­tial or Busi­ness Address
  4. A Unique Iden­ti­fy­ing Num­ber (from an accept­able doc­u­ment such as a pass­port, driver’s license, or oth­er gov­ern­ment-issued ID)

Who Must File the Beneficial Ownership Information Form?

The Cor­po­rate Trans­paren­cy Act broad­ly defines which enti­ties are required to file the BOI form. Essen­tial­ly, the fil­ing require­ment tar­gets enti­ties that are formed by fil­ing a doc­u­ment with a Sec­re­tary of State or sim­i­lar office, includ­ing cor­po­ra­tions, lim­it­ed lia­bil­i­ty com­pa­nies (LLCs), and sim­i­lar legal enti­ties. Here is a break­down of the types of busi­ness­es that must file:

  1. Cor­po­ra­tions and LLCs: Any domes­tic cor­po­ra­tion or LLC that is reg­is­tered in the U.S. must file the BOI form.
  2. For­eign Com­pa­nies: For­eign enti­ties that are reg­is­tered to do busi­ness in the U.S. are also required to file.
  3. Oth­er Legal Enti­ties: Part­ner­ships, lim­it­ed lia­bil­i­ty part­ner­ships (LLPs), busi­ness trusts, and cer­tain types of non­prof­it orga­ni­za­tions may be sub­ject to the fil­ing require­ment if they are reg­is­tered by fil­ing with the state.

Exemptions from Filing

Not all enti­ties are required to file the BOI form. The Cor­po­rate Trans­paren­cy Act pro­vides exemp­tions for spe­cif­ic types of enti­ties that are already sub­ject to sub­stan­tial reg­u­la­to­ry over­sight. Some of the key exempt enti­ties include:

  1. Pub­licly Trad­ed Com­pa­nies: Com­pa­nies that are list­ed on a U.S. stock exchange are exempt because they are already sub­ject to strin­gent SEC report­ing require­ments.
  2. Banks: Finan­cial insti­tu­tions, includ­ing banks and cred­it unions, are exempt due to their exist­ing AML and Know Your Cus­tomer (KYC) reg­u­la­tions.
  3. Gov­ern­ment Enti­ties: State and local gov­ern­ment enti­ties are exempt.
  4. Larg­er Oper­at­ing Com­pa­nies: Any busi­ness with more than 20 full-time employ­ees, over $5 mil­lion in rev­enue, and a phys­i­cal office in the U.S. is exempt from fil­ing.
  5. Inac­tive Enti­ties: Enti­ties that are no longer oper­at­ing and have no assets are also exempt from fil­ing.

When Must the Beneficial Ownership Information Form Be Filed?

The tim­ing of when the Ben­e­fi­cial Own­er­ship Infor­ma­tion Form must be filed is cru­cial for both exist­ing and new­ly formed enti­ties.

  1. Exist­ing Enti­ties: Com­pa­nies that were in exis­tence before Jan­u­ary 1, 2024, must file the BOI form no lat­er than Jan­u­ary 1, 2025. This gives these enti­ties a one-year peri­od to com­ply with the new report­ing require­ments.
  2. New­ly Formed Enti­ties: Any enti­ty formed or reg­is­tered on or after Jan­u­ary 1, 2024, must file the BOI form with­in 30 days of for­ma­tion or reg­is­tra­tion. This require­ment ensures that new­ly cre­at­ed enti­ties are imme­di­ate­ly includ­ed in the sys­tem and are sub­ject to the trans­paren­cy mea­sures from the out­set.
  3. Changes to Ben­e­fi­cial Own­er­ship: If any changes occur in the ben­e­fi­cial own­er­ship of an enti­ty after the ini­tial fil­ing, the com­pa­ny must update its BOI form with­in 30 days of the change. This includes changes in con­trol, own­er­ship, or the infor­ma­tion pro­vid­ed for any ben­e­fi­cial own­er.

Who is considered a beneficial owner of my company?

A ben­e­fi­cial own­er is any indi­vid­ual who, direct­ly or indi­rect­ly

  • Exer­cis­es sub­stan­tial con­trol over a report­ing com­pa­ny, or
  • Owns or con­trols at least 25 per­cent of the own­er­ship inter­ests of a report­ing com­pa­ny

An indi­vid­ual might be a ben­e­fi­cial own­er through sub­stan­tial con­trol, own­er­ship inter­ests, or both. Report­ing com­pa­nies are not required to report the rea­son (i.e., sub­stan­tial con­trol or own­er­ship inter­ests) that an indi­vid­ual is a ben­e­fi­cial own­er.

A report­ing com­pa­ny can have mul­ti­ple ben­e­fi­cial own­ers.

For exam­ple, a report­ing com­pa­ny could have one ben­e­fi­cial own­er who exer­cis­es sub­stan­tial con­trol over the report­ing com­pa­ny, and a few oth­er ben­e­fi­cial own­ers who own or con­trol at least 25 per­cent of the own­er­ship inter­ests of the report­ing com­pa­ny.

A report­ing com­pa­ny could have one ben­e­fi­cial own­er who both exer­cis­es sub­stan­tial con­trol and owns or con­trols at least 25 per­cent of the own­er­ship inter­ests of the report­ing com­pa­ny. There is no max­i­mum num­ber of ben­e­fi­cial own­ers who must be report­ed.

 

Penalties for Non-Compliance

Non-com­pli­ance with the BOI fil­ing require­ments can lead to sig­nif­i­cant penal­ties. Will­ful­ly fail­ing to file the required BOI form or pro­vid­ing false or fraud­u­lent infor­ma­tion can result in both civ­il and crim­i­nal penal­ties. Civ­il penal­ties can include fines up to $500 per day for each day the vio­la­tion con­tin­ues, while crim­i­nal penal­ties can lead to fines of up to $10,000 and impris­on­ment for up to two years.

These penal­ties high­light the impor­tance of time­ly and accu­rate fil­ings to avoid poten­tial legal and finan­cial con­se­quences.

Enti­ties sub­ject to the BOI fil­ing require­ment should take care­ful note of the dead­lines and ensure that they pro­vide accu­rate and com­plete infor­ma­tion to avoid penal­ties. Com­pa­nies that are unsure whether they must file or what infor­ma­tion to pro­vide should con­sid­er con­sult­ing with a legal or tax pro­fes­sion­al to ensure com­pli­ance.

 

Ben­e­fi­cial Own­er­ship Infor­ma­tion Form Down­load