What is a BOI Report?

The Beneficial Ownership Information (BOI) Report is a recent filing requirement mandated by the U.S. Treasury’s Financial Crime Enforcement Network (FinCEN) in accordance with the Corporate Transparency Act (CTA).

When it’s time to submit a BOI report, you can rely on BizForms to ensure that your business adheres to the updated reporting standards.

How Does the Corporate Transparency Act Relate to BOI Reports?

The Corporate Transparency Act, or CTA, acts as a law targeting money laundering and financial misuse. Enacted by Congress, this law aims to combat activities like money laundering and terrorism financing.

As a result, businesses established before 2024 that meet specific criteria are now categorized as reporting companies. These reporting companies bear the responsibility of filing Beneficial Ownership Information (BOI) reports by January 1, 2025.

Furthermore, reporting companies established in 2024 have a 90-day window from the date of formation, upon registration with the Secretary of State, to submit their BOI report.

Which Businesses Are Required to Submit a BOI Report?

Established and recently established enterprises in the sectors listed below are likely to qualify as reporting companies:

• Retail
• Professional services
• Real estate
• Healthcare
• Construction
• Technology
• Wholesale trade
• Hospitality

However, there are exemptions for businesses in these sectors. A company meeting any of the following criteria is not obligated to file a BOI report:

• Employs more than 20 full-time staff members.
• Maintains a physical office within the United States.
• Has filed federal taxes in the most recent tax year, reflecting gross sales exceeding $5 million.
• Additionally, certain highly regulated industries are exempt under the Corporate Transparency Act.

What kind of businesses need to file a BOI Report?

Commencing in 2024, the new beneficial ownership reporting requirements enforced by FinCEN will come into effect. While most corporations, LLCs, and limited partnerships are likely required to file a BOI report, certain business structures are exempt.

Determining whether your business qualifies as a “reporting company” can be perplexing. BizForms has compiled information providing an overview of the types of entities and industries that will likely need to report – along with the key exemptions that apply.

Our objective is for you to gain a clearer understanding of whether and how your business may need to comply with these new transparency requirements.

Different Types of Reporting Entities
The rule outlines “reporting companies” obligated to submit BOI reports. Reporting companies encompass:

Domestic Reporting Companies

– Corporations
– Limited liability companies (LLCs)
– Any entities created by filing formation documents with a secretary of state

This means various entities formed under state law will likely qualify, such as:

– Limited liability partnerships
– Limited partnerships
– Limited liability limited partnerships
– Business trusts

Foreign Reporting Companies

This includes any foreign-formed entity registering to do business in the U.S. by filing documents with a secretary of state, including:

– Foreign corporations
– Foreign LLCs

Exempt Entities

Twenty-three types of entities are exempt from being considered reporting companies. Examples include:

– Publicly traded companies
– Financial institutions like banks and credit unions
– Insurance companies
– Non-profits

FinCEN can also grant exemptions to other companies it deems unnecessary to report.

Industries that Will Likely Need to Report
Most newly formed or registered companies in the following industries will likely qualify as reporting companies:

– Retail: Small and medium-sized retailers like boutiques, restaurants, or specialty stores formed as LLCs or corporations.
– Professional Services: Law firms, accounting practices, consulting firms, and other service businesses organized as corporations or LLCs.
– Real Estate: Most newly formed real estate development, management, and investment companies.
– Construction: General contractors, subcontractors, and specialty trade contractors organized as limited partnerships or LLCs.
– Technology: Early-stage startups and app developers formed as LLCs or C-corps.
– Wholesale Trade: Distributors, importers, and exporters formed as limited partnerships, corporations, or LLCs.

Need Help Filing a BOI Report for Your Business?

Your work keeps you busy enough. You don’t have time to waste learning new regulations, and mistakes in filing can cost you time and resources. If your business needs to file a BOI report, it’s critical that the job gets done right.

There is an easy solution that doesn’t require hiring an expensive specialist. BizForms is here to help you.

By offering a streamlined procedure for assembling entity ownership information and supporting documentation, our BOI filing platform establishes the standard for the industry. With our easy-to-use platform, you can file BOI reports more quickly and with less effort. For simple and effective filing that saves you time and money, select BizForms.

Who is a Beneficial Owner?

A beneficial owner is any individual who, either directly or indirectly, holds substantial influence over the reporting firm. Examples of such high-ranking personnel include the Chief Executive Officer, President, and General Counsel.

Additionally, anyone who possesses or exercises control over twenty-five percent or more of the voting stock or equivalent of the company is also considered a beneficial owner.

The reporting company is required to disclose each beneficial owner’s name, address, date of birth, and identification number (from a government-issued document such as a driver’s license) to FinCEN.

FinCEN defines a beneficial owner as:

“Any individual who, directly or indirectly, either (1) exercises substantial control over a reporting company, or (2) owns or controls at least 25 percent of the ownership interests of a reporting company.” The rule exempts five types of individuals from the definition of “beneficial owner” in accordance with the CTA.

In defining substantial control, the rule outlines various activities that could constitute substantial control of a reporting company, encompassing those who can make significant decisions on behalf of the entity. FinCEN’s approach aims to eliminate loopholes allowing corporate structuring that conceals owners or decision-makers, crucial for unveiling anonymous shell companies.

The rule establishes standards and mechanisms to determine whether an individual owns or controls 25 percent of the ownership interests of a reporting company. These standards and mechanisms address situations where ownership interests are held in trust.

These definitions accommodate the diverse ownership or control structures reporting companies may adopt. For reporting companies with simple organizational structures, identifying and reporting their beneficial owners should be a straightforward process, as FinCEN anticipates the majority to have simple ownership structures.

What does a BOI Report Entail?

Businesses required to file a BOI report must include the following information in their initial filing:

• The complete legal name of the business
• Any alternate nicknames or trade names under which the business operates
• The current street address of the business’s location
• The jurisdiction in which the business was formed
• Taxpayer identification number

Similarly, the beneficial owners and company applicants of a business must provide their full legal names, dates of birth, and current residential addresses, along with an identifying number such as a:

• US passport
• Local or state ID
• Driver’s license number
• Foreign passport if applicable
• Beneficial owners and company applicants are required to include images of their chosen identification document in the report.

Qualifying companies have the option to file through FinCEN’s BSA E-file System, but navigating this complex system independently can be challenging. BizForms simplifies the process by filing the BOI report on behalf of your company.

When Should Reporting Companies File Their BOI Reports?

Any company formed and operating within the United States before January 1, 2024, must submit its initial BOI report to FinCEN before January 1, 2025. Companies established on January 1, 2024, or in the days thereafter must file a BOI report within 90 days of their formation.

Reporting companies are also obligated to report any changes or updates to the beneficial owner or company information within 90 days.

Penalties for Failing to File

Businesses that neglect to submit BOI reports will incur fines of $500 per day for each day of non-compliance, up to a maximum of $10,000. However, businesses making efforts to rectify their BOI reports will not face penalties. Instead, businesses providing inaccurate data have a 90-day window to resubmit a corrected BOI report.

Work With BizForms to File Your BOI Report

If you require assistance with filing a BOI report or have inquiries regarding how the CTA may impact your business, reach out to BizForms.

Your BOI Report Due Date

FinCEN will commence accepting BOI reports from January 1, 2024. Following this, all businesses obligated to file BOI reports are expected to submit their reports by January 1, 2025. For businesses established after January 1, 2024, there is a 90-day window from the date of creation to file their BOI report.

Incorporating Essential Information Into a BOI Report

The CTA specifies that a business’s beneficial owner and company applicant must either take responsibility for a BOI report or authorize another party to provide their information on their behalf.

A beneficial owner is an individual who directly or indirectly owns or controls at least 25 percent of the ownership interests or exercises “substantial control” over the reporting company. A company applicant is anyone who registers the business with a secretary of state, such as an attorney, accountant, or paralegal.

FinCEN and related parties expect both the beneficial owner and company applicant to disclose the following information:

• Legal names and residential addresses of both parties
• Dates of birth of both parties
• Identifying numbers from passports, state IDs, driver’s licenses, or a foreign passport

Whether a business chooses to file a BOI report independently or seeks assistance from BizForms, it should ensure that the report includes the following information:

• The business’s legal name
• Nicknames or trade names used by the business in operations
• The legal address of the business
• The jurisdiction in which a beneficial owner and company applicant formed the business
• The business’s taxpayer identification number

If your business overlooks an essential detail or if there are changes in the required details between January 1, 2024, and January 1, 2025, you can report those changes by filing a new BOI report with FinCEN.

What are the exemptions to the BOI Reporting requirements?

According to FinCEN, the following businesses that do not have to file BOI reports include:

1. Certain types of securities reporting issuers.
2. A U.S. governmental authority.
3. Certain types of banks.
4. Federal or state credit unions as defined in section 101 of the Federal Credit Union Act.
5. Bank holding company as defined in section 2 of the Bank Holding Company Act of 1956, or any savings and loan holding company as defined in section 10(a) of the Home Owners’ Loan Act.
6. Certain types of money transmitting or money services businesses.
7. Any broker or dealer, as defined in section 3 of the Securities Exchange Act of 1934, that is registered under section 15 of that Act (15 U.S.C. 78o).
8. Securities exchanges or clearing agencies as defined in section 3 of the Securities Exchange Act of 1934, and that is registered under sections 6 or 17A of that Act.
9. Certain other types of entities registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934.
10. Certain types of investment companies as defined in section 3 of the Investment Company Act of 1940, or investment advisers as defined in section 202 of the Investment Advisers Act of 1940.
11. Certain types of venture capital fund advisers.
12. Insurance companies defined in section 2 of the Investment Company Act of 1940.
13. State-licensed insurance producers with an operating presence at a physical office within the United States, and authorized by a State, and subject to supervision by a State’s insurance commissioner or a similar official or agency.
14. Commodity Exchange Act registered entities.
15. Any public accounting firm registered in accordance with section 102 of the Sarbanes-Oxley Act of 2002.
16. Certain types of regulated public utilities.
17. Any financial market utility designated by the Financial Stability Oversight Council under section 804 of the Payment, Clearing, and Settlement Supervision Act of 2010.
18. Certain pooled investment vehicles.
19. Certain types of tax-exempt entities.
20. Entities assisting a tax-exempt entity described above.
21. Large operating companies with at least 20 full-time employees, more than $5,000,000 in gross receipts or sales, and an operating presence at a physical office within the United States.
22. The subsidiaries of certain exempt entities.
23. Certain types of inactive entities that were in existence on or before January 1, 2020, the date the Corporate Transparency Act was enacted.

Many of these exempt entities are already regulated by the federal and/or state government, and many already disclose their beneficial ownership information to a governmental authority.

Additional information about the entities that are exempt can be found in the Beneficial Ownership Information Reporting Regulations at 31 CFR § 1010.380(c)(2). It is recommended to consult the text of the regulations, which include specific criteria for the exemptions, before concluding that an entity qualifies for an exemption.