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Do I Need to File a BOI Report for My Business?

By FileForms | August 23, 2023

The Beneficial Ownership Information (BOI) reporting requirements can be confusing, especially for small business owners navigating these complex regulations for the first time. But complying with the new reporting requirements is essential to avoid potential problems down the road.

Not filing when required could leave your business vulnerable if illicit actors were to exploit your company for illegal purposes and can result in penalties and even criminal charges. Let’s break down who needs to file a BOI report and help you better understand these requirements so you can make an informed decision.

What Is the Purpose of BOI Reporting?

The Beneficial Ownership Information (BOI) reporting requirements aim to provide transparency into who actually owns and controls private companies in the United States. While many businesses have nothing to hide, a lack of visibility into company ownership has enabled illicit activity and financial crimes.

By knowing who owns companies, law enforcement, and regulators can better detect and prevent criminal schemes that use shell companies to conceal identities and launder funds. If you represent the interests of a business, it is imperative to know whether you need to file a BOI report for your company.

Which Companies Must File BOI Reports?

Not all companies must file BOI reports. Certain exempted entities are not considered reporting companies, including some publicly traded companies, most financial institutions, investment funds, and specific non-profit organizations. There are 23 separate exemptions.

In general, under the Corporate Transparency Act, two types of companies may qualify as “reporting companies” required to submit beneficial ownership information to the Financial Crimes Enforcement Network, FinCEN.:

  • Domestic Reporting Companies: LLCs, corporations, and similar operations, formed under the laws of any U.S. state or Indian tribe
  • Foreign Reporting Companies: Certain non-U.S. entities registered to do business in any state or tribal jurisdiction are also required to file

What Are the Exemptions?

Exempted entities are described in detail on the FinCEN website.

Here are just a few examples of the of companies and entities that may be exempt from filing a BOI report:

  • Some kinds of tax-exempt entities
  • Certain venture capitalist fund advisers
  • Some types of registered public accounting firms
  • Large operating companies with at least 20 full-time employees, more than $5,000,000 in gross receipts or sales, and a physical operation within the United States.

Who Qualifies as a Beneficial Owner?

A beneficial owner is any individual who directly or indirectly:

  • Exercises substantial control over the reporting company. This includes senior officers like the CEO, president, and general counsel.
  • Owns or controls at least 25% of the company’s ownership interests (e.g., shares of stock). Indirect ownership through intermediaries can qualify.

Reporting companies must provide identifying information to FinCEN about each beneficial owner, including their name, address, birth date, and identification number from an acceptable document like a driver’s license.

How to Determine If You Must File a BOI Report

To determine if your business is a reporting company required to file a BOI report, consider these questions:

  • Did You File Documents With a Secretary of State or a Similar Office to Create or Register Your Company? This determines if your company meets the formal definition of a reporting company. Some exceptions will apply, as discussed above.
  • Does Your Company Have Any Individual Who Owns or Controls at Least 25% of Its Ownership Interests? This would make that individual a beneficial owner, requiring your company to report their information.
  • Does Your Company Have Any Senior Officer Who Exercises Substantial Control, Like a CEO or President? Senior officers automatically qualify as beneficial owners, regardless of ownership interests. Your company would need to report their information.
  • Is Your Company of a Type That Is Exempt From Reporting, Like a Non-Profit, Bank, or Publicly Traded Company? If so, your company would likely be exempt from reporting, even if it meets the first two criteria.

If you answer “yes” to the first two questions and “no” to the last question, your company likely qualifies as a reporting company that must submit beneficial ownership information to FinCEN starting January 1, 2024.

Learn More About How FileForms Can Help Your Business with Filing A BOI Report

To ensure that its clients successfully and accurately fulfill filing and reporting requirements, FileForms offers expert advice and patented technologies. FileForms is a comprehensive filing tool for company reports and informational forms.

FileForms provides services for foreign bank account reports, annual reports, registered agent services, BOI reports, and reporting under the Foreign Account Tax Compliance Act.

If you need help filing a BOI report for your business, FileForms can help. Contact Us today.