The Beneficial Ownership Information Report (or BOI Report) is brand new – and if you own a business, you need to know about it sooner rather than later. Here’s what we know about the newest mandatory US filing.

What is the BOI Report?

The BOI Report was created by the FinCEN (Financial Crimes Enforcement Network) in order to prevent illicit business activities. This includes things like money laundering, terrorist financing, and tax fraud. This report is designed to catalogue information about the owners or controllers of US companies.

Who needs to file a BOI Report?

Not every company is required to file a BOI report. But these companies do:

  • Corporations
  • Limited Liability Companies
  • ANY entity registered with the Secretary of State or a similar state office
  • Foreign companies – in specific cases like:
    • Reporting as corporations, LLCs, or any entity registered with the Secretary of State (or similar state office)
    • A company registered to do business in any US state (OR Tribal jurisdiction)

Who is exempt from filing?

Some businesses don’t have to file BOI Reports. These business types are already HEAVILY regulated in other ways. This includes:

  • General Partnerships
  • Trusts
  • Companies with 20+ full time US employees AND at least $5mil in Gross Receipts
  • Public Accounting Firms
  • Security dealers and brokers
  • Tax Exempt Organizations
  • SEC reporting issuers
  • Banks, Credit Unions, and other financial institutions
  • Inactive Entities – meaning any company formed prior to 2020 with no assets, and no funds exchanged over $1k in 12 months

When do you need to file?

WHEN you need to file depends on when your business was created. If your business was created before January 1, 2024, then you have until January 1, 2025 to file your initial BOI report.

However, if your business is created after January 1, 2024, you don’t have as much time to file. For 2024, new businesses have 90 days to file. In 2025, this window shortens to 30 days. But there’s a reason for this! If you’re creating a new business, your BOI Report should be completed along with your business registration. Consider it a part of new business registration.

After your initial report has been filed, you aren’t required to file again UNLESS there is a change of information. For instance, if your company moves to a new location, you would be required to update you BOI filing to include your new address. These updates are required to be made within 30 days of the change.

What information does the report cover?

The report covers three aspects of your business.

First, you’ll be required to report information regarding your business. This includes the business’s legal and trade names, the current address, registration information, and the designated taxpayer ID.

Next, you’ll provide information on the BOI Report applicant. Whoever completes the report will need to provide their name, date of birth, and address as well as an ID number and type. An acceptable form of ID would be your driver’s license or passport. This only applies to businesses formed after 2023.

Finally, any beneficial owner is required to provide the same information as the applicant.

Understanding Beneficial Ownership & Substantial Control

A beneficial owner is anyone who:

  1. Has “substantial control” of the company OR
  2. Owns at least 25% of the reporting company’s ownership interests

Beneficial ownership doesn’t include the owners or corporations or other entities, but if the owner meets other qualifications as a beneficial owner, then they are required to apply regardless.

The term “substantial control” may sound flexible, but there are specific descriptors for what qualifies as a “substantial control.”

  • Any company officer (President, CEO, CFO, etc.)
  • Having the authority to appoint or remove any officer
  • Has significant influence over:
    • Nature, scope, and attributes of the business
    • Reorganization, dissolution, merger
    • Major expenditure or investments
    • Officer Compensation incentive programs
    • Entry or termination of significant contracts

How do you file?

There will be a website available on January 1, 2024 where you will be able to file your BOI Report directly. There is no fee to file a BOI report.

Are there penalties for NOT filing?

In short – yes. If you fail to file your BOI Report, you will be subject to serious penalties. Unfortunately, there are no exceptions to these penalties. Even claiming that you were unaware of the filing requirements (whether that is true or not) will not excuse tardy reports.

If you miss the deadline to file, you are subject to a $500 daily fine with no cap. There is also a criminal penalty of up to $10,000 and/or potential prison time of up to two years. These penalties can be imposed against the entity itself, but could also be against any person who caused the failure to file.

Encurio’s Take on the BOI Report

Though this is a fairly simple, informational report, because of the associated penalties, Encurio will not be handling BOI Reporting for our clients. We are happy to be a resource to you as you file this report for the first time.