FinCEN’s Beneficial Ownership Information (BOI) Reporting Requirements for 2024
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- What is BOI reporting?
- BOI reporting requirements
- What are the exemption codes?
- How TaxBandits simplify BOI reporting?
BOI Reporting Requirements - An Overview
Written by Stephanie Glanville
Stephanie Glanville is the Marketing Manager of TaxBandits. She has several years of experience with IRS tax forms and the funtionality of TaxBandits. With a passion to help business owners better understand their IRS tax forms and filing, she aims to create content that is valuable and informative.
As per the Corporate Transparency Act (2021), the Financial Crime Enforcement Network (FinCEN) mandates that most small businesses that operate in the U.S. file a Beneficial Ownership Information Report (BOIR).
In order to comply with this reporting requirement, it's essential to understand the key guidelines established by FinCEN. Read this article to learn more about the reporting requirements, the information required for BOI reporting, deadlines, and penalties.
Table of Contents:
- What is a BOI report?
- Should My Business Submit a BOI Report?
- What Information is Required on a Beneficial Ownership Information (BOI) Report?
- Who is a “Beneficial Owner”?
- Who is a “Company Applicant”?
- When is the Deadline for BOI Reporting
- Is There a Penalty for Businesses that Fail to Submit BOI Reports?
- Are There Exemptions to File BOI Reports?
- Is there a penalty for businesses that fail to submit Beneficial ownership information (BOI) Reports?
- What will FinCEN do with my information? Who will have access to it?
- Simplified BOI Reporting from TaxBandits
1. What is a BOI report?
The Beneficial Ownership Information Report (BOI) is a comprehensive report that outlines information about the business structure and highlights the substantial control of a Reporting Company (business that files the BOI report). This law was enacted by FinCEN to prevent illicit activities like money laundering, financial or terrorism, and
serious tax fraud.
FINCEN Facts!
According to FINCEN, an estimated 32.6 million small businesses are required to file a BOI report in 2024, and an additional 5 million businesses will file each year.
2. Should My Business Submit a BOI Report?
According to FinCEN, your business will be considered a reporting company and must file a BOI report if it falls under any of the following categories.
- Domestic Entities
- Foreign Entities
Domestic Entities
Domestic entities are businesses established by filing organizational documents with state authorities. These businesses operate under U.S. tax laws and include corporations, LLCs, limited partnerships, and limited liability partnerships (LLPs).
Foreign Entities
Foreign entities, though sharing similarities with domestic entities, differ in origin as they are established outside the United States. However, they are still required to file with relevant state authorities to conduct operations within the U.S.
If your business falls under either of these categories, it is mandatory to report Beneficial Ownership Information. However, there are a few exceptions.
3. What Information is Required on a Beneficial Ownership Information (BOI) Report?
You’ll need the following information to complete the BOI Report for your business.
Type of BOI Filing
Specify whether it is an initial BOI filing, correction, or an update. If your company has already filed an initial report but has now been identified as an exempt entity, you must submit a ‘Newly Exempt’ BOI report.
Reporting Company (Business) Information
- Name
- TIN
- Address
- Registered agent details
Beneficial Owners Details
- Name
- Address
- Date of Birth
- Identifying Documents (e.g., Driving License or Passport)
Company Applicant Details
- Name
- Address
- Date of Birth
- Identifying Documents (e.g., Driving License or Passport)
Note: If your company was created/registered in the U.S. before January 1, 2024, you are not required to report company applicants in your initial report.
4. Who is a “Beneficial Owner”?
As defined by FinCEN, a beneficial owner is an individual who either directly or indirectly:
- Exercises control over the reporting companies.
- Owns or controls at least 25 percent of the reporting company’s ownership interests.
Individuals who own or control at least 25% of the ownership interests in the reporting company
Individuals who own or take control of the reporting business directly or indirectly are considered business owners, and their information should be reported to FinCEN. Examples of this individual include stockholders, partners, LLC members, and owners of a business that holds ownership in another business subject to BOI reporting.
Individuals have control over the reporting companies
According to FinCEN regulations, reporting companies are also required to disclose individuals with substantial control over the company. Substantial control refers to those who, either directly or indirectly, influence or make significant business decisions or possess the authority to appoint or remove top executives.
This category includes roles such as president, CEO, CFO, General Counsel, and more. There is no restriction on the number of individuals reported for exercising substantial control.
5. Who is a “Company Applicant”?
A company applicant is someone who submits the entity formation documents to the state or initiates the registration, filing, or application for a non-U.S. entity within the U.S. This individual could be the business owner or another party, such as a Certified Public Accountant (CPA).
According to FinCEN, the following are the criteria for company applicants.
- The individual directly responsible for submitting the documents that establish or register the company.
- If multiple individuals are involved in the filing process, the person primarily responsible for directing or controlling the filing.
Note: You can include a maximum of two company applicants in your report.
6. When is the Deadline for BOI Reporting
The deadline to submit the initial BOI report depends on your company's establishment date.
- If the company is formed or registered before January 1, 2024, submit the BOI report by January 1, 2025.
- If the company is formed or registered after January 1, 2024, submit the BOI report within 90 days from the date you received notice of the company’s effective registration from the state.
- For companies to be formed or registered after January 1, 2025, the deadline for filing a BOI report is within 30 days from the date the business receives notice of its effective registration from the state.
Note: In the event of any changes needed to the provided information, alterations in ownership, or corrections, you must file the corrected/updated reports within 30 days of such changes or when the mistake is noticed.
FREE BOI Reporting Due Date Checker
Choose your company's registered effective date, and our calculator will provide the BOIR due date for
your business.
7. Is There a Penalty for Businesses that Fail to Submit BOI Reports?
Yes! Your business may face significant consequences and penalties if it fails to comply with the BOI reporting requirements. There are three types of reporting violations that may incur penalties:
- Willful Failure to File a Report
- Providing False Information
- Unauthorized Disclosure of Information
Failure to submit the required information can lead to civil or criminal penalties. Civil penalties may reach up to $591 for each day the violation persists, while criminal penalties can involve imprisonment for up to two years and/or a fine of up to $10,000. Senior officers of an entity failing to file a required BOI report may also be held accountable for the lapse.
8. Are There Exemptions to File BOI Reports?
FinCEN identifies 23 specific types of businesses that are exempt from reporting BOI. Please refer to the table below
for details.
| No | Entities Exempt from BOI |
|---|---|
| 1 | Securities reporting issuer |
| 2 | Governmental authority |
| 3 | Bank |
| 4 | Credit union |
| 5 | Depository institution holding company |
| 6 | Money services business |
| 7 | Broker or dealer in securities |
| 8 | Securities exchange or clearing agency |
| 9 | Other Exchange Act registered entity |
| 10 | An investment company or investment adviser |
| 11 | Venture capital fund adviser |
| 12 | Insurance company |
| 13 | State-licensed insurance producer |
| 14 | Commodity Exchange Act registered entity |
| 15 | Accounting firm |
| 16 | Public utility |
| 17 | Financial market utility |
| 18 | Pooled investment vehicle |
| 19 | Tax-exempt entity |
| 20 | Entity assisting a tax-exempt entity |
| 21 | Large operating company |
| 22 | Subsidiary of certain exempt entities |
| 23 | Inactive entity |
9. Who does not qualify as a beneficial owner?
The following individuals are exceptions from being reported as beneficial owners:
Minor Child
- Instead of providing details for a minor child, the reporting company may submit the details of the parent or guardian. However, once the child reaches the age of majority, this exemption no longer applies. At that point, the reporting company must update its beneficial ownership information accordingly.
Nominee, Intermediary, Custodian, or Agent
- An individual serving as a nominee, intermediary, custodian, or agent.
Employee
- An individual who is a full-time employee of the reporting company, provided they do not hold a senior officer position such as CEO, CFO, or President.
Inheritor
- An individual who is implying their future interest in the reporting company through a right of inheritance. Once the individual invests their interest, this exemption no longer applies, and they become the beneficial owner of the reporting company.
Creditor
- An individual who meets the definition of a beneficial owner of a reporting company.
10. What will FinCEN do with my information? Who will have access to it?
The information collected by FinCEN will be stored in a private database and will not be publicly accessible. It will be protected and accessed only by authorized users for approved purposes. FinCEN may share beneficial ownership information with select federal agencies, law enforcement, financial institutions with consent, and certain foreign authorities through a U.S. agency.
11. Simplified BOI Reporting from TaxBandits
As a small business owner, it is crucial to fulfill your BOI reporting requirements. Ignoring this responsibility may expose you to serious penalties for non-compliance.
TaxBandits offers you a comprehensive solution to simplify your BOI reporting process. Our software has been designed with a user-friendly interface and intuitive features to make sure your BOI reporting is as easy, secure, and accurate.
- Free corrections/updates for a week
- Prepare reports at your own pace with our auto-save feature
- If your report is rejected, resubmit it for free
- Get instant FinCEN status updates via email
- Invite beneficial owners to securely collect their data
- Receive timely reminders on due dates
- Dedicated support team for instant assistance
PRO Features – Exclusive for Tax Professionals and Bulk Filers
- BanditConnect - Enable secure and seamless collaboration with your clients.
- BanditCollab - Invite Your Team Members and Delegate the BOI Reporting Responsibilities.
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