As of January 01, 2024 there is a
*New Filing Requirement for U.S. LLC or INC*

Beneficial Ownership Information
(BOI) - File to avoid $10,000 penalty

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✅ What is Beneficial Ownership Information Reporting?

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Beneficial Ownership Information Reporting is a recent mandate that commenced on January 1, 2024, in the United States. This regulation applies to specific businesses, compelling them to disclose details about individuals who hold ultimate ownership or control, even if these individuals are not officially documented as legal owners. The primary aim is to counteract the misuse of shell companies by criminals seeking to conceal their identities and engage in illicit activities such as money laundering and terrorism financing.

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✅ Why is Beneficial Ownership Information (BOI) Reporting crucial?

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Anonymous shell companies have long been a preferred tool for criminals. Beneficial Ownership Reporting is instrumental in raising the barriers for criminals seeking to conceal true ownership. By making it more challenging for individuals to hide behind business entities, this reporting system aids law enforcement in tracking down bad actors and disrupts the operations of those with malicious intent.

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✅ Which Companies Have to File a Beneficial Ownership Information Report?

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The new rule encompasses most businesses established or registered to operate within the U.S. This includes corporations, limited liability companies (LLCs), and specific types of trusts. Notable exceptions to this rule include publicly traded companies and certain financial institutions.

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The beneficial ownership rule is applicable to two main categories of businesses:
 

• Domestic Reporting Companies: These are entities like corporations, LLCs, and others formed by filing with a secretary of state or a similar office under the law of a state or Indian tribe.
   

• Foreign Reporting Companies: These include corporations, LLCs, and other entities created under the law of a foreign country but registered to conduct business in any U.S. state or Tribal jurisdiction.

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In summary, the beneficial ownership rule covers most businesses in the U.S., excluding domestic sole proprietorships. Specific exemptions to the beneficial ownership reporting requirements exist, such as certain types of banks, credit unions, investment companies, insurance companies, and regulated public utilities.

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✅ What Information Do Companies Need to Include in a Beneficial Ownership Information  Report?

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The following information needs to be included in the beneficial ownership report:
 

1. Company Information:
 

• The business’s legal name.

• Trade Names: Any registered "doing business as" (DBA) names used by the company

• The current street address of its principal place of business in the U.S.

• Jurisdiction of Formation or Registration: The state or country where the business was incorporated or registered.

• Taxpayer Identification Number (TIN): The company's federal tax identification number, such as its EIN.

• A reporting company will also have to indicate whether it is filing an initial report, or a correction or an update of a prior report.

 

2. Beneficial Owner Information:
 

• Name: Full legal name of each beneficial owner.

• Date of Birth: Date of birth of each beneficial owner.

• Address: Residential address of each beneficial owner.

• Government-Issued ID Number: A unique identifier issued by a government agency, such as a passport, driver's license, or national ID card.

• The reporting company will also have to report an image of the identification documents.

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✅ What Are the Penalties for Noncompliance with the Beneficial Ownership Information Report Rule?

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Businesses are strictly obligated to file accurate and timely reports disclosing their beneficial owners as mandated by the Corporate Transparency Act of 2020.

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Noncompliance will not be tolerated and may result in severe penalties, including:

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• Financial Fines: Failure to file a required report or amendment by the deadline incurs a daily penalty of $500, accumulating to a maximum of $10,000.
   

• Criminal Charges: Willful noncompliance or intentional misrepresentation of information constitutes a felony, punishable by imprisonment for up to two years.
   

• Enhanced Penalties: In cases where noncompliance intersects with anti-money laundering violations, the potential imprisonment increases to 10 years.

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✅ When Do I Need to File My Beneficial Ownership Information Report?

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The deadline for filing your initial Beneficial Ownership Information Report (BOI Report) depends on when your company was created or registered:
 

• Before January 1, 2024: You have until January 1, 2025 to file your BOI Report. No rush, but don't forget about it!

• Between January 1, 2024 and January 1, 2025: You have 90 calendar days from the first official notice you receive about your company's creation or registration. This could be either:
   

When you receive actual notice from the government that your company is officially registered.
When the government first publicly announces your company's registration (usually through a secretary of state website).
Whichever comes earlier triggers the 90-day countdown.
 

• On or after January 1, 2025: The deadline is simpler - you have 30 calendar days from the first official notice you receive about your company's creation or registration. Again, same rules apply - actual notice or public announcement, whichever comes first.
   

Remember, timely filing is crucial to avoid potential penalties. If you're unsure about your deadline or need help with the filing process, feel free to contact us!

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✅ Who can file a BOI report on behalf of a reporting company, and what information will be collected on filers?

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When it comes to fulfilling your Beneficial Ownership Information Report (BOI Report) obligations, the Corporate Transparency Act grants flexibility in designating appropriate representatives. Your company may entrust the report filing to:

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• Internal Designees: Authorized employees, such as officers, directors, or any other individual with familiarity and access to the necessary information regarding your company's beneficial ownership structure.
   

• Beneficial Owners Themselves: Holding direct control over the company, the beneficial owners may opt to personally file the BOI Report, ensuring firsthand accuracy and transparency.
   

• External Experts: Should you require specialized assistance, qualified legal counsel, accounting professionals, or dedicated BOI filing services can be commissioned to handle the reporting process on your behalf.

Contact Information for Verification:

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To validate the legitimacy of the submitted BOI Report, FinCEN requires the individual acting as the filer to provide certain contact information:
 

• Full Legal Name: This serves as official identification and establishes clear accountability for the report submission.

• Accessible Communication Channel: An email address or phone number allows FinCEN to reach the filer for any necessary clarifications or follow-up inquiries.

 

Choosing a trustworthy and authorized individual with comprehensive knowledge of your company's beneficial ownership structure is paramount for accurate and timely reporting. By selecting a qualified representative, you mitigate the risk of non-compliance and potential penalties, ensuring a smooth and seamless fulfillment of your reporting obligations.

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✅ Identifying Your Beneficial Ownership Reporting Obligations: Who Must File?

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Companies required to report are called reporting companies. There are two types of reporting companies:

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• Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
   

• Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.
   

There are 23 types of entities that are exempt from the reporting requirements (see Question C.2). Carefully review the qualifying criteria before concluding that your company is exempt.

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✅ Are some companies exempt from the reporting requirement?

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Yes, 23 types of entities are exempt from the beneficial ownership information reporting requirements. These entities include publicly traded companies meeting specified requirements, many nonprofits, and certain large operating companies.

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The following table summarizes the 23 exemptions:

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1. Securities reporting issuer (e.g., publicly traded companies)

2. Governmental authority (federal, state, local, tribal, or foreign)

3. Bank (federally insured or chartered by a state)

4. Credit union (federally insured)

5. Depository institution holding company

6. Money services business (registered with FinCEN)

7. Broker or dealer in securities (registered with the SEC or state securities regulator)

8. Securities exchange or clearing agency (registered with the SEC)

9. Other Exchange Act registered entity (e.g., transfer agent, self-regulatory organization)

10. Investment company or investment adviser (registered with the SEC)

11. Venture capital fund adviser (registered with the SEC)

12. Insurance company (licensed by a state)

13. State-licensed insurance producer

14. Commodity Exchange Act registered entity (registered with the CFTC)

15. Accounting firm (registered with the PCAOB or a state regulatory body)

16. Public utility (regulated by a state or federal agency)

17. Financial market utility (regulated by a state or federal agency)

18. Pooled investment vehicle (e.g., mutual fund, hedge fund)

19. Tax-exempt entity (e.g., charitable organization, religious organization)

20. Entity assisting a tax-exempt entity

21. Large operating company (with total assets exceeding $1 billion and annual gross revenue exceeding $100 million)

22. Subsidiary of certain exempt entities

23. Inactive entity (not conducting business operations or holding financial assets)

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✅ Who is a beneficial owner of a reporting company?

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Understanding who truly controls a company is crucial for transparency and combating financial crime. This is where the concept of beneficial ownership comes in.

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In simple terms, a beneficial owner is someone who:

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• Exercises substantial control over the company, even without holding a formal title like CEO or owning a majority of shares. This could involve influencing key decisions, directing business activities, or holding substantial power behind the scenes.

• Owns or controls at least 25% of the company's ownership interests, directly or indirectly. This might involve holding shares, controlling trusts, or wielding influence through other entities.
   

It's important to remember that beneficial ownership extends beyond the usual suspects like major shareholders and named executives. The rules can delve deeper, potentially identifying certain family members, hidden partners, or complex ownership structures as beneficial owners.

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✅ What is substantial control?

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An individual can exercise substantial control over a reporting company in four different ways. If the individual falls into any of the categories below, the individual is exercising substantial control:

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• The individual is a senior officer (the company’s president, chief financial officer, general counsel, chief executive office, chief operating officer, or any other officer who performs a similar function).
   

• The individual has authority to appoint or remove certain officers or a majority of directors (or similar body) of the reporting company.
   

• The individual is an important decision-maker for the reporting company. See Question D.3 for more information.
   

• The individual has any other form of substantial control over the reporting company as explained further in FinCEN’s Small Entity Compliance Guide (see Chapter 2.1, “What is substantial control?”).

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✅ What are Important decisions?

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Important decisions are decisions about a reporting company’s business, finances, and structure. An individual that directs, determines, or has substantial influence over these important decisions exercises substantial control over a reporting company. 

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Important decisions can include:

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• Strategic direction: Setting the overall course of the business, such as entering new markets, acquiring other companies, or developing new products.
   

• Financial management: Approving budgets, allocating resources, and making significant investments.
   

• Governance and leadership: Appointing key executives, approving major transactions, and shaping the company's internal structure.
   

• Risk management: Implementing policies and procedures to mitigate potential threats and ensure compliance with regulations.

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✅ Who is a company applicant of a reporting company?

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For reporting companies formed or registered after January 1, 2024, a new term enters the scene: company applicant. But who exactly falls under this category?
 

Think of company applicants as individuals holding the reins during the company's creation or registration process. Only two individuals can qualify:
 

1. The Filing Hand: This is the person who directly submits the official document that brings the company to life, whether through incorporation or registration.
    

2. The Guiding Force: When multiple people are involved in the filing process, this individual emerges as the key decision-maker, holding the reins of direction and control.
    

Essentially, company applicants are the architects behind the company's formal entry into the business world.

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✅ Tools & Filing:

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• DO YOU NEED TO FILE? Run a quick test

• FILE NOW > BOI Filing For Non U.S. Residents / U.S. Citizens

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