If you own or manage a business in the United States, you may need to comply with new Beneficial Ownership Information (BOI) reporting requirements issued by the Financial Crimes Enforcement Network (FinCEN). These rules, mandated by the Corporate Transparency Act (CTA), are designed to combat financial crimes and improve transparency in business ownership.

Q: What is BOI Reporting?

A: BOI reporting requires certain entities to disclose details about their beneficial owners. Beneficial owners are individuals who directly or indirectly own or control at least 25% of the company or exercise substantial control over it. The information will be maintained by FinCEN in a secure database and used for law enforcement and regulatory purposes.

Q: Who has to file a report?

A: The reporting requirement applies to “reporting companies,” which generally include:

• U.S. Corporations, limited liability companies (LLCs), and similar entities typically formed by filing with a US. State’s Secretary of State.
• Foreign companies registered to do business in the US.

Q: Are any U.S. companies exempt from the need to file?

A: Some entities are exempt from BOI reporting. These include:

• Publicaly traded companies
• Large companies with more than 20 full-time employees and $5+ million in gross receipts.
• Banks, credit unions, insurance companies, and certain other regulated entities (which generally have already provided beneficial ownership information elsewhere).

For a full list of exemptions, visit FinCEN’s exemptions page.

Q: What information must be reported?

A: The reporting company must provide each beneficial owner’s:

• Full legal name
• Date of birth
• Residential or business address
• Unique identifying number (e.g. passport number, driver’s license number) and an image of the corresponding document

Q: What’s the point of this? Isn’t that information required when starting a company and filing with the Secretary of State?

A: In many jurisdictions, a company can be owned by another company, which can be owned by another company, etc., thereby hiding the identity of the true beneficial owners. FinCEN wants a way of knowing what individuals have ultimate ownership of a company.

Q: What is the deadline to report beneficial ownership information?

A: Entities created before January 1, 2024 must submit reports by January 1, 2025. Entities created on or after January 1, 2024 must submit reports within 30 days of creation.

Q: How do I file my BOI report?

A: BOI reports must be submitted through FinCEN’s Beneficial Ownership Secure System (BOSS), which provides step-by-step instructions for filing. Step-by-step instructions for reporting are available here: FinCEN BOI Reporting Guide.

Q: Does this include side-hustles, small businesses, and entities I own but haven’t really used in years?

A: Yes, if your business is registered as an entity with the Secretary of State (e.g. LLC, S-Corp, etc.), unless an exemption applies (see above). Sole-proprietors that do business under their own name without a registered entity do not have a reporting obligation.

Q: If I don’t own or manage a business, is there anything I need to do?

A: No, this is only relevant for those that own or manage a business with an obligation to report.

Q: Are there penalties for not reporting BOI information?

A: Failure to file a BOI report, or submitting false information, can result in significant penalties, including:

• Civil fines of up to $500 per day of non-compliance.
• Criminal penalties of up to $10,000 and/or imprisonment for up to two years.

Q: Wasn’t there a court case that declared this whole BOI reporting thing unconstitutional?

A: Yes. In March 2024, a federal district court ruled that the Corporate Transparency Act (CTA), which mandates BOI reporting, was unconstitutional. However, the U.S. Department of Justice appealed this ruling, and the appeal is currently pending. As it currently stands, the court’s injunction applies only to the named plaintiffs. Therefore, unless your business was a member of the National Small Business Association (NSBA) as of March 1, 2024, the BOI reporting requirements remain in effect for you.

For more information about the BOI reporting requirements, exemptions, and deadlines, visit FinCEN’s official BOI resource page.