It’s easy, and often relatively inexpensive, to set up a business in the US. While most business owners start a business to meet their own personal and financial goals, bad actors sometimes abuse this system for money laundering, terrorism financing, or other nefarious purposes. They hide behind business entities they create, making it difficult for law enforcement to find and stop them. 

As a result, Congress (on a bipartisan basis) passed the Corporate Transparency Act in 2021. It created a new requirement to report beneficial ownership information. 

The Financial Crimes Enforcement Network, or FinCEN, is a bureau of the Department of Treasury, and its mission includes combating money laundering, and protecting national security. 

The new Beneficial Ownership Information Report (BOIR) is a new tool to help them fulfill that mission. Collecting information about who is behind business entities and making it available to government agencies for national security, intelligence, and law enforcement purposes, will hopefully help make it harder for criminals to hide. 

What Is a Beneficial Ownership Report (BOI)?

A beneficial ownership information report supplies personal identifiable information about individuals who own/control a business whether directly or indirectly. The BOI report is new and was formed to help create transparency across companies and help prevent the use of shell companies or complex company structures to hide money or other assets.

Not all companies are required to file, but many are, and it’s important you understand the requirements to avoid potentially substantial penalties and even criminal charges. 

BOI Filing Requirements

Reporting companies are companies that are required to report. These generally fall into two categories:

• Domestic reporting companies. Generally companies that are formed in the US as legal entities—limited liability companies (LLCs), corporations, or other companies formed by filing a document with the secretary of state or any similar office in the United States.

• Foreign reporting companies. These are entities (including corporations and limited liability companies) that have been formed under the law of a foreign country and have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.

Companies that are required to file and that are not exempt (again, “reporting companies”) must file within the following time frames:

• Existing companies: Companies created or registered to do business in the United States before January 1, 2024 (and that are not exempt from filing), must file by January 1, 2025.

• New formed or or registered companies: Companies created or registered to do business in the United States in 2024 (and that are not exempt), have 90 calendar days to file after receiving actual or public notice that their company’s creation or registration is effective.

What if your business operates as a sole proprietorship? It probably will not have to file a BOI. As FinCEN explains:
“An entity is a reporting company only if it was created (or, if a foreign company, registered to do business) in the United States by filing such a document. 

“Filing a document with a government agency to obtain (1) an IRS employer identification number, (2) a fictitious business name, or (3) a professional or occupational license does not create a new entity, and therefore does not make a sole proprietorship filing such a document a reporting company.”

Make sure you check to see whether you need to file and meet the filing deadline.

What Is BOI for LLC?

A BOI for a limited liability company (LLC) is the same as a BOI for any other company. As long as you filed with the secretary of state or similar state office to create your LLC, and your business is not exempt, you will likely be required to file a BOI. This also goes for LLCs formed under Tribal law.

*Note: If you have a disregarded single-member LLC or a similar company with only one owner you may be able to use your (the owner’s) SSN or ITIN as the TIN.

What Is a Beneficial Owner?

According to FinCEN, a beneficial owner is “an individual who either directly or indirectly: (1) exercises substantial control over a reporting company, or (2) owns or controls at least 25 percent of a reporting company’s ownership interests.” 

Someone with substantial control often is an important decision-maker, and may include senior officers, anyone who can hire/fire senior officers and impact directors, and those that control intermediary entities.

If you are unsure about who may be a beneficial owner, FINCEN offers a free checklist with questions you can answer to help you understand who you may need to list. It also provides resources to help you figure out if your business is a reporting company or are exempt.

LLC Beneficial Ownership Report

As previously mentioned, there is no difference between an LLC beneficial ownership information report and a BOI for another company structure such as a corporation. 

The essential question is whether or not a company is required to file a BOI, or whether it is exempt. 

There are 23 types of entities that are exempt, along with several specific exemptions for individuals, including minors (if their guardian/parent is listed), non-senior employees, and others.  

BOI Reporting Requirements

When completing the BOI, you will need the name, date of birth, address, an id number, and a picture of the identification document that will be provided for each person listed on the beneficial owner information report, as well as company applicants.

The ID document can include a valid U.S. driver’s license, passport, state identification document, local government ID, or Indian tribe ID. Those  without one of those forms of identification can use a valid foreign passport. 

You may want to review the 5-minute FinCEN demo YouTube video before you get ready to file to make sure you are prepared. 

Who Is Exempt From BOI Reporting?

There are 23 types of companies that are exempt from BOI reporting; these include (but are not limited to) accounting firms, public utility, certain financial institutions (banks and credit unions), insurance companies, and tax-exempt entities. 

Outside of these companies, there are also certain people that don’t need to be listed on the BOI report. These are minors (as long as parents/guardians are listed), non-senior officer employees, creditors, future inheritors, and nominees.

You can review the exemptions in detail in FinCENs BOI FAQ documents.

How to File a BOI Report

For most businesses, navigating the Corporate Transparency Act and filing your BOI report shouldn’t be terribly difficult. But whether you do it yourself or hire a company to file for you, make sure you do it. Failing to file may result in expensive penalties.

You can file your initial BOI report online at Fincen.gov/BOI. (That’s also where you can file an updated report.)

You can either use the online filing portal or you can download a PDF, fill it out, and submit it as an attachment. (You’ll need Adobe Reader to open the PDF.)

Here’s an overview of the online process for filing your initial BOI report, with screenshots obtained on or around September 12, 2024. 

These screenshots are only for illustrative purposes. Visit the FinCEN website for the latest information. 

First, you’ll indicate whether you’re filing an initial report, correcting or updating a prior report, or notifying FinCEN of a newly exempt entity. 

If the business does not already have a FinCEN identifier, check the box to request one. 

Unless your business is a Foreign pooled investment vehicle, or already has a FinCEN ID, click the box to request to receive a FinCEN ID and one will be issued. 

If the box for Foreign Pooled Investment Vehicle is checked, a pop up box will appear warning that “all Company Applicant fields and all Beneficial Owners (except the first Beneficial Owner) will be cleared/disabled. Do you wish to continue?”

If the Foreign Pooled Investment Vehicle button is not checked, the next step is to enter the legal name of the business, and any alternative names (for example, a fictitious name, trade name, or “doing business as”, if the business has one). 

The next step is to provide the tax identification number for the business. Provide the Employer Identification Number (EIN) if the business has one. Otherwise, provide the U.S. Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). 

Choose “Foreign” if the reporting company has a foreign-issued TIN and no U.S. TIN. If you select “foreign”, you will be able to fill out the country/jurisdiction. Otherwise, that field will be grayed out.

Next, identify the jurisdiction in which the business was formed. If the “United States of America” is selected, the next step is to select a state. 

You’ll then need to fill out the current US address for the business. Note the instructions state to “enter the reporting company’s complete current street address information, including city, state, zip code”.

If your business has a principal place of business in the United States or U.S. Territory, the street address should be that of the principal place of business. In a separate FAQs page, FinCEN explains that a P.O. Box is not acceptable.

Next, you’ll need to provide information about whether the business is an existing reporting agency as of January 1, 2024. Check this box if the reporting company was created or registered before January 1, 2024.

If you check it, you’ll see this message and then skip to Part III.

If the entity was created on or after January 1, 2024, then you’ll need to fill out the Company Applicant Information.

This may seem a little confusing at first. Company applicants are individuals, not companies or legal entities. It could be an attorney or accountant, and often will be the person at a business formation service who filed the formation documents with the secretary of state or other organization. 

There can be up to two individuals identified here: the person who filed the document that registers or creates the company, and if more than one person is involved, the person who is “primarily responsible for directing the filing.” 

You can refer to section E of the BOI FAQs document for more information. And there’s a separate guide, the Small Entity Compliance Guide, that offers more information if you still have questions about this section.

First, if the company applicant already has a FinCEN ID they can enter it here instead of the additional information. Otherwise,  fields 19 through 33.

If not, the applicant will provide information about their legal name and date of birth in the format MM/DD/YYYY. (Foreign applicants should make sure they use the proper format since that’s not common in countries outside the US.)

The next section is for reporting the current address of the company applicant. If an entity formation service or paralegal registered the business, for example, the business street address can be listed here. Otherwise, the individual’s residential street address must be reported.

That company applicant must provide identification from a list of acceptable options, including a current state-issued driver’s license or state/local/Tribe-issued ID or U.S. passport. If the company applicant doesn’t have one of those documents, a non-expired foreign passport may be used. 

After providing information about the ID, a copy must be uploaded. 

Part III. Beneficial Owner Information

This section is where the filer provides information about the beneficial owner(s) of the business.  Beneficial owners are individuals who directly or indirectly own or control a company.

You’ll provide information about one beneficial owner at a time. If a beneficial owner is a minor child, you can check box 35 and provide parent or guardian information instead. 

If you already have a FinCEN ID number you can enter it into box 36. If you don’t, simply leave that field blank. 

Check box 37 “exempt identity” if “the beneficial owner holds its ownership interest in the reporting company exclusively through one or more exempt entities, and the name of that exempt entity or entities are being reported in lieu of the beneficial owner’s information.” If box 37 is checked, the legal name of the exempt entity must be entered in field 38.

Next, the legal name and date of birth must be reported for the beneficial owner: 

That’s followed by the residential address of the beneficial owner. Again, a PO Box is not acceptable. 

The beneficial owner must also provide identification from a list of acceptable options, including a current state-issued driver’s license or state/local/Tribe-issued ID or U.S. passport. If the company applicant doesn’t have one of those documents, an unexpired foreign passport may be used. 

After providing information about the ID, a copy must be uploaded. 

If there is more than one beneficial owner, be sure to scroll back to the top of the page and click the “Add Beneficial Owner” button to add that information. 

Otherwise click “next”.

Submit Tab

On the last page, the person submitting the form will provide their first and last name, and email address. 

There’s a box confirming they are authorized to submit the form, and that it is complete and correct. 

It also warns about possible civil penalties and even criminal penalties for the willful failure to report information to FinCEN, the willful failure to update it, or the “willful provision of false or fraudulent beneficial ownership information to FinCEN.” 

It’s important to file this form and to keep it updated. 

Again, you can watch a Fincen YouTube video that walks through a basic filing. It may be helpful to review in advance. 

Watch Out for Scams!

There are legitimate companies offering services to help small business owners file their BOI report and stay current on filing requirements. Some business owners prefer to outsource this task so they can focus on other business activities. 

However, FinCEN is also warning of scammers who are preying on unsuspecting business owners. FinCEN warns against:

• Companies impersonating FinCEN and charging fees. FinCEN does not charge a fee for filing. It warns “Do not send money in response to any mailing that claims to be from FinCEN or another government agency.”
• Companies sending fraudulent emails or letters trying to get respondents to click on a URL or to scan a QR code, then requesting personal information and/or payment. FinCEN warns: “Do not click any suspicious links or attachments or scan any QR codes in emails, on websites, or in any unsolicited mailings.”
• Companies referencing fake forms. In particular, FinCENT warns about scammers referencing “Form 4022,” an “Important Compliance Notice” or a “US Business Regulations Dept.”  These are fake. FinCEN warns that it “does not have a ‘Form 4022’ and there is no government entity called “US Business Regulations Dept.”

The Ohio Secretary of State also warns that “websites are often set up to spoof (opens in a new window) a legitimate site. This is done by using a domain name that looks or sounds like legitimate site addresses.” 

You can make sure you go to the official FinCEN website by typing “Fincen.gov” into a search browser, then confirm that the site is secure by checking the security information in the URL.

Where Can I Get Help with BOI Reports?

While FinCEN says it anticipates most businesses can file on their own, you may want to get help or delegate this task. 

Fincen BOI FAQ

I heard there was a court case that affects BOI filing?

On March 1, 2024, a federal district court in Alabama entered a final declaratory judgment in the case of National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.), concluding that the Corporate Transparency Act exceeds constitutional limitation. That case is currently being appealed. In the meantime, FinCEN will continue to implement the Corporate Transparency Act as required by Congress, except for the plaintiffs, which include members of the National Small Business Association. 

Those plaintiffs are the only ones not currently required to file as a result of that lawsuit. 

What are Corporate Transparency Act exemptions?

The Corporate Transparency Act is the law that created the BOI reporting requirement. Under the Corporate Transparency Act, there are 23 types of organizations that are exempt. 

What does BOI mean?

BOI means beneficial ownership information. It is a report that identifies those who indirectly and directly own/control a company.

Who needs to submit beneficial ownership information?

Reporting companies that are not exempt must file a BOI report. As mentioned earlier, this includes domestic US companies, including LLCs and corporations, formed by filing a document with the secretary of state or similar office, and foreign companies formed under the laws of another country that have registered to do business in the US by filing a document with the secretary of state or similar office. There are 23 types of entities that are exempt from filing. 

Also, minor children (as long as a parent or legal guardian is reported as a beneficial owner), nominees, employees (excluding senior officers), future inheritors, and creditors do not qualify as beneficial owners.

Generally, sole proprietors will not not need to file, unless they were created by filing a document with a secretary of state or similar office.