Beneficial Ownership Information (BOI) Reporting

The Beneficial Ownership Information (BOI) rules and reporting requirements refer to a set of regulations that require companies and other legal entities to identify and report the individuals who ultimately own or control these organizations, known as beneficial owners. These rules aim to improve transparency, combat money laundering, tax evasion, and terrorist financing. While the specific rules may vary from country to country, there are some general principles that apply.

  • Definition of beneficial owners: Beneficial owners are typically individuals who own or control a significant percentage of a company's shares or voting rights, exercise control through other means, or have a substantial interest in the company.
  • Reporting and registration: Companies must identify their beneficial owners, maintain updated records, and report this information to relevant authorities or a central register. Reporting requirements may include submitting BOI upon incorporation, updating information regularly, or as changes occur.
  • Verification: Authorities may require companies to provide evidence to verify the accuracy of the beneficial ownership information submitted. This could include documentation like identification documents, share certificates, or trust deeds.
  • Access to BOI: The information collected on beneficial owners may be made available to law enforcement, financial institutions, or the public, depending on the jurisdiction. This facilitates due diligence checks and supports efforts to investigate financial crimes.
  • Penalties and enforcement: Failure to comply with BOI rules and reporting requirements can result in penalties such as fines, imprisonment, or the dissolution of the company.

Which businesses must comply with the Beneficial Ownership Information (BOI) rules?

Businesses that fall under the Beneficial Ownership Information regulations are designated as "reporting companies" by FinCEN. This category includes both domestic and foreign corporations, limited liability companies (LLCs), and other business entities that have been set up or registered to operate within the United States.

There are companies however that are not mandated to submit a BOI report. If a company meets the following requirements, it then qualifies as a “large operating company” which can then provide them with a status that is not mandated to submit a BOI report:

  • 20 or more full-time employees who are employed in the United States
  • A physical office in the United States
  • Filed a Federal Income Tax Information or Return in the previous year with more than 5 million USD in gross receipts or sales from within the United States

In addition to this, there are 23 types of business entities that can be exempt from BOI reporting.

Examples include: banks, insurance companies, accounting firms, etc.

What do I need to file a BOI report?

The information that you will need to include in the BOI report are simple ones which is likely that you already have. Take a look at the list below to start gathering any information that you will need to complete the report.

Company Report:

  • Company’s legal name
  • Trade or DBA name
  • Principal place of business address
  • Jurisdiction where it was formed
  • IRS Taxpayer Identification Number

Company’s Beneficial Owners:

  • Individual’s legal name
  • Date of Birth
  • Home Address
  • Identifying Number from one of the following: Driver’s License, Passport, State ID

(NOTE: Include an image of the document from which the number is obtained.) 

Beneficial Owners

Beneficial owners are typically individuals who own or control a significant percentage (atleast 25%) of a reporting company's shares or voting rights, exercise control through other means, or have a substantial interest in the company.

Company Applicants
 
Company applicants can be up to two individuals: (1) the person who directly submits the document establishing the LLC and (2) the person primarily responsible for overseeing or controlling the document's submission. Although LLCs formed before 2024 have a company applicant, they are not required to disclose any information about them. Only LLCs established in 2024 and later must provide such information.

When does my business file a BOI report?

If your company has been established before January 1, 2024, you will have until January 1, 2025 to file your BOI report. If your company was established after January 1, 2024, and before January 1, 2025, you will have 90 calendar days after receiving notice that your company’s registration is effective before BOI report is due. If your company has been registered as a business after January 1, 2025, you have 30 calendar days after receiving notice that your company’s registration is effective before BOI report is due.

What is the penalty for not submitting a BOI report?

Businesses can be fined up to 500USD per day the violation continues, and criminal fines up to 10,000USD, imprisonment up to two years, or even both.

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