BOI Filing FAQs

This term refers to individuals that have either 25% or more ownership in a U.S. small business or substantial control in the business, which is the ability to make important decisions for the company. FinCEN requires reporting personal information about individuals who either directly or indirectly own or control a company in the new Corporate Transparency Act. These reports are called Beneficial Ownership Information reports.

In 2021, a bipartisan effort in Congress led to the passage of the Corporate Transparency Act. This legislation introduces a new obligation for companies to report beneficial ownership information. The purpose is to support the U.S. government’s commitment to making it more challenging for wrongdoers to conceal or profit from their dishonest gains through shell companies or complex ownership structures. The Corporate Transparency Act aims to build a confidential database that the Federal Government can use to discover all individuals related to a reporting company.

Under the Corporate Transparency Act, various authorities, including Federal, State, local, and Tribal officials, and select foreign officials submitting requests through a U.S. Federal government agency, can obtain beneficial ownership information. Private citizens cannot access this database and it is not public information.

This access is granted for activities authorized in national security, intelligence, and law enforcement. Financial institutions may also access such information in specific situations, provided the reporting company consents.

Additionally, regulatory bodies overseeing these financial institutions will have access during their supervision processes.

FinCEN is in the process of formulating rules to govern the access and handling of beneficial ownership information. All reported information will be securely stored in a non-public database, utilizing robust information security measures commonly employed in the Federal government for safeguarding sensitive yet unclassified information systems at the highest security levels.

FinCEN will collaborate closely with authorized parties to ensure they comprehend their roles and responsibilities, guaranteeing that the information is used solely for authorized purposes and handled in a manner that prioritizes security and confidentiality.

Companies will need to start submitting beneficial ownership information reports to FinCEN after January 1, 2024. FinCEN will not process any beneficial ownership information reports until January 1, 2024.

• Companies formed or registered for business before January 1, 2024, have until January 1, 2025, to submit their initial beneficial ownership information report.

• Companies established or registered between January 1, 2024, and January 1, 2025, must file their initial BOI report within 90 calendar days of receiving notice of their creation or registration. This 90-day period starts when the company is officially informed of its effective creation or registration or after a secretary of state or similar office first issues public notice, whichever comes first.

• Companies created or registered on or after January 1, 2025, are required to file their initial BOI reports with FinCEN within 30 calendar days from the actual or public notice of the company’s effective creation or registration.

• Companies also must file updated reports after the initial report if any information about the company or a beneficial owner changes. These reports are due within 30 days of any change.

Starting January 1, 2024, FinCEN will initiate the acceptance of beneficial ownership information reports.

Yes, if a company is created or registered to do business in a U.S. territory and doesn’t qualify for exemptions, it must report beneficial ownership information to FinCEN. U.S. territories include Puerto Rico, the Northern Mariana Islands, American Samoa, Guam, and the U.S. Virgin Islands.

Companies obligated to report are called “reporting companies.” Your company is a reporting company unless you have an exemption. This includes LLCs, Corporations, or any other entity created by filing a document with a U.S. State.

There are some exemptions. The most common is the Large Operating Company Exemption. This exemption requires your business to have BOTH 21 or more full-time employees and $5 million or more in sales on your last business tax return. The remaining exemptions are more rare and mostly include highly regulated companies.

There are two categories of reporting companies:

• Domestic Reporting Companies: These include corporations, limited liability companies, and other entities established by submitting documents to a secretary of state or a similar office within the United States. Nearly every small U.S. business is a reporting company.

• Foreign Reporting Companies: These are entities, such as corporations and limited liability companies, created under the laws of a foreign country that have registered to conduct business in the United States by filing documents with a secretary of state or a similar office.

23 distinct types of entities are exempt from the reporting obligations for beneficial ownership information. This includes publicly traded companies that meet specific requirements, numerous nonprofits, and certain large operating companies.

The following list provides an overview of the 23 exemptions:

1. The most common is the Large Operating Company Exemption. This exemption requires your business to have BOTH 21 or more full-time employees and $5 million or more in sales on your last business tax return. 

2. Securities reporting issuer required to file supplementary and periodic information under section 15(d) of the Securities Exchange Act of 1934.

3. Company that exerts governmental authority on behalf of a State or Tribe.

4. Registered Bank.

5. Registered Credit union.

6. Registered depository institution holding company.

7. Registered money services business.

8. SEC-registered broker or dealer in securities.

9. SEC registered securities exchange or clearing agency.

10. Company registered under the Commodity Exchange Act.

11. SEC-registered investment company or investment adviser.

12. SEC-registered venture capital fund adviser.

13. Registered Insurance company.

14. State-licensed insurance producer.

15. Commodity Exchange Act registered entity.

16. Registered accounting firm.

17. Public utility company.

18. Financial market utility company designated by the Financial Stability Oversight Council.

19. Pooled investment vehicle operated by an SEC registered person.

20. Tax-exempt entity.

21. Entity that exclusively exists to provide financial assistance or governance to a tax-exempt entity.

22. Entity 100% owned by an exempt entity.

23. Inactive entity created before 1/1/2020 that holds no assets, is not engaged in any business, has no foreign owners, and has not sent or received money or changed ownership in the prior 12 months.

Before concluding that your company is exempt, carefully examine the criteria associated with each exemption.

The status depends on the entity type and the manner of its establishment:

• A domestic entity, like a statutory trust, business trust, or foundation, qualifies as a reporting company only if its creation involves filing a document with a secretary of state or a similar office. Similarly, a foreign entity earns reporting status if it registers to conduct business in the United States by filing with a secretary of state or an equivalent office.

• Variations exist in state laws regarding whether specific entity types, such as trusts, necessitate filing with the secretary of state or a similar office for creation or registration. For instance:
  

  • If a trust is formed in a U.S. jurisdiction mandating such filing, it becomes a reporting company unless exempted.

  • Notably, not all states require foreign entities to register by filing a document with a secretary of state or a similar office for conducting business in the state.

  • However, if a foreign entity is obligated to file such a document to register for business in a state and complies, it attains reporting company status unless an exemption applies.

Entities must also evaluate whether any exemptions to reporting requirements are applicable. For instance, a foundation may not be obliged to report beneficial ownership information to FinCEN if it qualifies for the tax-exempt entity exemption.

No, the act of registering a trust with a court of law to establish the court’s jurisdiction over potential disputes related to the trust does not confer reporting company status upon the trust. If the trust is registered with a Secretary of State, however, it is likely a reporting company.

A beneficial owner is an individual who, either directly or indirectly:

1. Exercises Substantial Control: Substantial control means an individual may have zero ownership of the entity, however, they have the ability to make important decisions for the reporting company. This alone makes them a beneficial owner under FinCEN’s regulation. This includes being an officer, manager, having the authority to appoint board members, sell or lease major assets, engage in important contracts for the entity, or other forms of important decision making.

2. Owns or Controls a Minimum of 25% Ownership Interests: Any individual with 25% of more of the ownership interests is a beneficial owner. This includes membership in an LLC, shares in a corporation, convertible notes and investment instruments, warrants, or any other form of ownership that either conveys ownership or can be converted into ownership. This is by individual, so if an individual owners 10% directly and an additional 30% through an LLC that invested in a reporting company, they would be over the 25% threshold and need to be included as a beneficial owner.

If ownership is in dispute and no initial BOI report is filed, report all individuals with substantial control over the company and those who own or control at least 25% ownership interests. If an initial report exists, update it within 30 days of resolution.

Generally, report individuals indirectly controlling the company or owning 25% through the corporate entity. Exceptions apply in specific cases involving exempt entities or identical beneficial owners.

An individual can exercise substantial control through four distinct avenues. An individual is deemed to exercise substantial control if they fall into any of the following categories:

• Senior Officer Status: The individual holds a senior officer position, such as the company’s president, chief financial officer, general counsel, chief executive officer, chief operating officer, or any other role performing a similar function.

• Authority in Appointing or Removing Officers or Directors: The individual possesses the authority to appoint or remove specific officers or a majority of directors (or a similar body) within the reporting company.

• Key Decision-Making Role: The individual plays a pivotal role in making significant decisions for the reporting company. This includes the ability to sell or lease assets, sign major contracts, or make high-level decisions for the reporting company.

• Other Forms of Substantial Control: The individual exercises substantial control over the reporting company through any other means. You must include ALL individuals with substantial control over the reporting entity.

An individual is an important decision-maker with substantial control when they are involved in decisions concerning any of the following – 

• Business Operations: Choices related to the overall functioning and operations of the company.

• Financial Matters: Decisions impacting the financial aspects and transactions of the company including leasing, purchase, sale, or disposal of assets.

• Organizational Structure: Determinations about the organizational framework and structure of the reporting company.

ANY individual who guides, determines, or significantly influences these crucial decisions is considered to exercise substantial control over the reporting company.

Ownership interest typically refers to an agreement that outlines ownership rights within the reporting company. Examples of ownership interests encompass various forms, such as equity shares, stock, voting rights, or any other mechanism employed to signify ownership. When calculating the 25% threshold to see if an individual is a beneficial owner, you must include ANY form of ownership.

There are five situations where an individual, who would typically be considered a beneficial owner of a reporting company, qualifies for an exception. These apply to minors, custodians or nominees, employees assigned to specific tasks who are not officers, those who have future ownership such as inheritance, and creditors who can only obtain ownership based on a future collection of a potential debt. In these instances, the reporting company is not obligated to report that individual as a beneficial owner to FinCEN.

Accountants and lawyers typically do not meet the criteria for being beneficial owners. However, this determination may hinge on the nature of their work. These individuals are often company applicants if they help set up the entity, which is covered in a later section.

• Accountants and lawyers providing general accounting or legal services are generally not considered beneficial owners. This is because standard, arms-length advisory, or other third-party professional services to a reporting company are not deemed to confer “substantial control.” Additionally, a lawyer or accountant designated as an agent of the reporting company may qualify for the “nominee, intermediary, custodian, or agent” exception from the beneficial owner definition.

• An individual holding the role of “general counsel” in a reporting company qualifies as a “senior officer” and, therefore, is considered a beneficial owner.

When a beneficial owner exclusively holds or controls their ownership interests in a reporting company through various exempt entities, the reporting company can provide FinCEN with the names of all these exempt entities instead of the individual beneficial owner’s details.

It’s important to note that this specific rule does not apply if an individual owns or controls ownership interests in a reporting company through a combination of exempt and non-exempt entities. In such instances, the reporting company must report the individual as a beneficial owner (unless an exception applies), while the exempt companies do not need to be listed.

The unaffiliated company itself cannot qualify as a beneficial owner of the reporting company since a beneficial owner must be an individual. 

Any individuals exerting substantial control over the reporting company through the unaffiliated company must be reported as beneficial owners. However, individuals who lack influence over important decisions made by the reporting company and do not exercise substantial control may not be deemed beneficial owners of the reporting company.

No, not necessarily. Determining whether a specific director meets any of these criteria is a matter the reporting company must assess on a director-by-director basis.

The status depends on the circumstances. A reporting company’s “partnership representative,” or “tax matters partner,” is not automatically considered a beneficial owner of the reporting company. However, such an individual may qualify as a beneficial owner if they exercise substantial control over the reporting company or own or control at least 25 percent of the company’s ownership interests.

The reporting obligation for company applicants applies exclusively to reporting companies established or registered on or after January 1, 2024. Companies formed prior to 2024 do not need to share their company application information.

A company obligated to report its company applicants will typically have up to two individuals who may qualify as company applicants:

1. The individual directly submitting the document that establishes or registers the company.

2. In cases involving multiple individuals in the filing process, the individual that is primarily responsible for directing or controlling the filing.

They will only submit a maximum of two company applicants. Company applicants are always individuals and never companies.

Not all reporting companies are obligated to disclose their company applicants to FinCEN. The requirement to report company applicants applies only to a reporting company established or registered to do business in the United States on or after January 1, 2024. Companies formed before 2024 do NOT need to report their company applicants.

The status of an accountant or lawyer as a company applicant hinges on their role in filing the document that establishes or registers a reporting company. Often, company applicants may be affiliated with a business formation service or law firm.

An accountant or lawyer may be designated as a company applicant if they directly submit the document creating or registering the reporting company. If multiple individuals are involved in the filing, an accountant or lawyer may be a company applicant if they are primarily responsible for directing or controlling the filing.

For example, an attorney at a law firm providing business formation services may oversee the preparation and filing of a reporting company’s incorporation documents. If a paralegal directly files the documents at the attorney’s direction, both the attorney and the paralegal are considered company applicants for the reporting company.

Up to two individuals must be reported as company applicants: the person who files the registration document and the one primarily responsible for directing or controlling the filing based on decision-making authority.

No, unless they have another role in the creation or registration of the company. The individual at a firm requesting courier services is the company applicant.

If the service only provides tools and employees are not directly involved, only the individual who files through the service is the company applicant.

No, a company applicant cannot be removed from a BOI report even if they no longer have a relationship with the reporting company. For reporting companies created on or after January 1, 2024, company applicant information must be reported in the initial BOI report, and updates are not required if the relationship changes.

The information to be disclosed depends on when the company was created or registered:

• If a reporting company is created or registered on or after January 1, 2024, it must report information about itself, its beneficial owners, and its company applicants.

• If a reporting company was created or registered before January 1, 2024, it only needs to provide information about itself and its beneficial owners. Company applicant information is not required.

A reporting company must disclose:

1. Legal name.

2. Any trade names, “doing business as” (d/b/a), or “trading as” (t/a) names.

3. Current street address of its principal place of business (if in the United States) or the current address from which the company conducts business in the United States (for foreign reporting companies). Post Office boxes are not allowed.

4. Jurisdiction of formation or registration.

5. Taxpayer Identification Number (or a foreign-issued tax identification number if applicable).

Additionally, the reporting company must indicate whether it is filing an initial report, a correction, or an update of a prior report.

The reporting requirement requires submitting only the following acceptable forms of identification:

1. A non-expired U.S. driver’s license (including any driver’s licenses issued by a commonwealth, territory, or possession of the United States).

2. A non-expired identification document issued by a U.S. state, local government, or Indian Tribe.

3. A non-expired passport issued by the U.S. government.

4. A non-expired passport issued by a foreign government (only when an individual does not possess one of the other three forms of identification listed above).

No, there is no annual reporting requirement. Reporting companies must file an initial BOI report and submit updated or corrected BOI reports as necessary within 30 days of any change to the company information or the information of any beneficial owner. This includes address changes.

Yes, if an identification document lacks a photo for religious reasons but is an accepted type, it can be submitted along with the report.

• If your company existed before January 1, 2024, the deadline for filing the initial beneficial ownership information report is January 1, 2025.

• If your company was created or registered between January 1, 2024, and January 1, 2025, the initial report must be filed within 90 calendar days after receiving notice of the effective creation or registration. This deadline commences either upon the company’s actual notice or after a secretary of state or similar office publicly announces its creation or registration, whichever occurs earlier.

• If your company was created or registered on or after January 1, 2025, the initial beneficial ownership information report must be filed within 30 calendar days after receiving notice of the effective creation or registration.

Failure to meet these deadlines may result in FinCEN penalties.

No, a parent company cannot file a single BOI report on behalf of its group of companies. Each company meeting the definition of a reporting company must independently file its own BOI report.

To obtain a TIN, specifically an Employer Identification Number (E.I.N.), within 30 days for timely BOI reporting, the Internal Revenue Service (I.R.S.) offers a free online application at irs.gov.

Foreign entities without an Individual Taxpayer Identification Number (ITIN) will need to request an EIN with a paper filing process that takes about 8 weeks. These companies should complete these filings shortly after formation to meet the 90 day requirement in 2024 for new entities. 

Reporting companies not subject to U.S. corporate income tax may report a foreign tax identification number and the relevant jurisdiction’s name instead of an E.I.N. or TIN.

No, an initial BOI report should only include beneficial owners as of the filing date. Historical beneficial owners need not be included. Reporting companies must promptly notify FinCEN of changes to beneficial owners through updated reports within 30 days of any change.

In the event of any changes to the required information about a reporting company or its beneficial owners in a filed beneficial ownership information report, an updated report must be filed within 30 days of the change to avoid penalties. No updated report is required for changes to previously reported information about a company applicant. 

Several circumstances necessitate filing an updated beneficial ownership information report. Examples include:

1. Reporting Company Changes: Any alteration to the information previously reported for the reporting company, such as the adoption of a new business name or changing the office address.

2. Beneficial Owner Changes: Changes in beneficial owners, like appointing a new C.E.O., ownership updates that impact the 25 percent ownership interest threshold, or even a new address for a beneficial owner.

3. Beneficial Owner Details Update: Any modifications to a beneficial owner’s name, address, or unique identifying number previously submitted to FinCEN. If a beneficial owner acquires a new driver’s license or another identification document reflecting a name, address, or identifying number change, the reporting company must file an updated beneficial ownership information report with FinCEN. This filing should include an image of the new identifying document.

Discovering an inaccuracy in a beneficial ownership information report requires prompt correction. Follow these steps:

1. Identify the Inaccuracy: Once aware or having reason to know of any inaccuracies in the report concerning your company, its beneficial owners, or its company applicants, initiate the correction process.

2. Timely Correction: Your company must rectify the inaccuracies within 30 days from the date of awareness or having reason to know about the inaccuracy. This ensures compliance with reporting standards.

   
   Maintain accuracy in your beneficial ownership information report by promptly addressing any discrepancies. 

If a reporting company, having already filed a beneficial ownership information report, becomes exempt, it must submit an updated report. This revised report should:

1. Clearly state the entity’s identity.

2. Include a checkbox indicating it’s newly exempt status.

FinCEN ensures reporting companies comprehend and fulfill their obligations related to reporting, updating, and correcting beneficial ownership information. Acknowledging the newness of this requirement:

• Timely Corrections: Rectifying errors or omissions within 90 days of the original report deadline may prevent penalties.

• Potential Penalties: Failure to adhere to beneficial ownership reporting obligations might lead to civil and criminal penalties including $10,000 fines, penalties of $591 a day, and/or up to 2 years in jail.

  
  Stay informed and comply with reporting standards to avoid legal consequences. 

Entities are eligible for the tax-exempt entity exemption if they meet any of these four criteria:

1. 501(c) Organization: The entity is covered by section 501(c) of the Internal Revenue Code of 1986 (Code) and is tax-exempt under section 501(a) of the Code, disregarding section 508(a).

2. Recent Tax-Exempt Loss: The entity, covered by section 501(c) of the Code, lost tax-exempt status within the last 180 days.

3. Political Organization: The entity qualifies as a political organization under section 527(e)(1) of the Code and is tax-exempt under section 527(a) of the Code.

4. Trust under Code 4947(a): The entity is a trust described in paragraph (1) or (2) of section 4947(a) of the Code.

Ensure your entity meets one of these criteria to claim the tax-exempt entity exemption.

Entities meet the criteria for the inactive entity exemption if all six of these conditions are satisfied:

1. Existence before January 1, 2020: The entity was established on or before January 1, 2020. This is important because it means that inactive entities formed in 2020 and beyond are NOT exempt from reporting.

2. Inactive Business Operations: The entity is not actively engaged in business.

3. Non-Foreign Ownership: The entity is not owned, either wholly or partially, directly or indirectly, by a foreign person. A foreign person is not classified as a United States person, as defined in section 7701(a)(30) of the Internal Revenue Code of 1986, encompassing U.S. citizens, residents, domestic partnerships and corporations, and other specified entities.

4. Stable Ownership: No changes in ownership occurred in the preceding twelve-month period.

5. Limited Financial Transactions: The entity has neither sent nor received funds exceeding $1,000, directly or through any affiliated financial account, in the past twelve months.

6. Asset Inactivity: The entity does not possess any assets, domestically or internationally, and holds no ownership interests in corporations, limited liability companies, or similar entities.

Your entity may only qualify for the inactive entity exemption by fulfilling all of these conditions.

An entity qualifies for the subsidiary exemption if the following applies: The entity’s ownership interests are 100% controlled or wholly owned, directly or indirectly, by any of these types of exempt entities:

• Securities reporting issuer

• Governmental authority

• Bank

• Credit union

• Depository institution holding company

• Broker or dealer in securities

• Securities exchange or clearing agency

• Other Exchange Act registered entity

• Investment company or investment adviser

• Venture capital fund adviser

• Insurance company

• State-licensed insurance producer

• Commodity Exchange Act registered entity

• Accounting firm

• Public utility

• Financial market utility

• Tax-exempt entity

• Large operating company

No, the large operating company exemption stipulates that the entity must independently employ more than 20 full-time employees in the United States. The criteria do not allow for the aggregation of employee counts across multiple entities.

A company that has always been exempt from Beneficial Ownership Information (BOI) reporting need not notify FinCEN. However, if a company initially filed a BOI report and subsequently qualifies for an exemption, it should file an updated BOI report to signify its newfound exempt status. This electronic filing entails the company identifying itself and marking a checkbox indicating its exemption.

No, a subsidiary must be fully, 100% owned or controlled by an exempt entity to qualify for the exemption from BOI reporting.

A “FinCEN identifier” is a distinct identifying number issued by FinCEN upon request. This is obtained by giving the individual’s information to FinCEN directly to get back a FinCEN identifier. This FinCEN ID can now be used on reports instead of personal information. Each entity or individual is entitled to just one FinCEN identifier.

When a beneficial owner or company applicant possesses a FinCEN identifier, reporting companies can provide this ID number instead of the individual’s regular personal details on a BOI report. The use of FinCEN identifiers by reporting companies is an evolving regulatory aspect, with additional guidance anticipated upon the conclusion of ongoing rule making.

Starting January 1, 2024, individuals can request a FinCEN identifier through an electronic web form. This involves furnishing details such as full legal name, date of birth, address, unique identifying number from an acceptable identification document, and an image of said document. Upon submission, the individual promptly receives a unique FinCEN identifier.

Reporting companies can request a FinCEN identifier by indicating so on the BOI report. After submission, the company instantly obtains a unique FinCEN identifier. If a reporting company desires a FinCEN identifier after its initial BOI report, it can submit an updated report specifically for this purpose, even if other information remains unchanged.

Acquiring a FinCEN identifier is not mandatory for individuals or reporting companies.

Both individuals and reporting companies with a FinCEN identifier must promptly update or correct their information. 

For individuals, any alterations to the submitted information must be reported within 30 days of occurrence. In the event of inaccuracies, corrections are required within the same timeframe. 

Reporting companies, similarly, should use an updated or corrected beneficial ownership information report to update their FinCEN ID information.

FinCEN is actively exploring options to enable individuals to deactivate an unused FinCEN identifier. This approach aims to relieve individuals from continuously updating their underlying personal information. Further guidance on this functionality will be provided as FinCEN finalizes this process.