BOI  - Beneficial Ownership Information Report

 

This is a summary of the Small Entity Compliance Guide. The entire summary can be found here - https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide.v1.1-FINAL.pdf

 

Who has to file the BOI?

Companies are required to file the BOI only if they meet the Reporting Rule’s definition of a “reporting company” and do not qualify for an exemption.

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.

 

Which companies are exempt from filing this report?

There are 23 specific types of entities that are exempt from the BOI.

Just to list two of them: 1) a non-for-profit entity under 501(c) and 2) an inactive entity.

Inactive means the company holds no assets, and received or sent less than $1,000 within the past 12 months. See the Small Entity Compliance Guide for the other types of exemptions.

 

 

What is required by the company to complete the BOI?

The company needs to identify all of its beneficial owners and report specific information about them. The required information will be explained later.

There are 2 types of beneficial owners:

 

1. Exercises substantial control over a reporting company.

 

Substantial control means one of any of the following 4 criteria: the person is either a senior officer, has the ability to appoint or remove a senior officer, can make important decisions for the company, or the individual has any other form of substantial control over the reporting company.

 

2. Owns or controls at least 25 percent of the ownership interests of a reporting company.

This includes 25% of the equity or stock, as well as a 25% ownership of the assets of the profits of the company. This ownership can also be owned indirectly through other entities that own the company.

 

However, there are five exceptions to the definition of beneficial owner. In these cases the reporting company does not have to report these beneficial owners.

1. The owner is a minor child. In this case the company needs to report information about the parent of the child.

2. The person is a nominee or agent of the actual owner. In this case the company needs to report information about the actual owner.

3. The person is the employee of the company, but not if he is a senior officer of the company.

4. An inheritor of the company that has a future right in the company, as long as he did not yet inherit the interest of the company.

5. A creditor of the company. Meaning somebody who is a beneficial owner only through the means of a debt that the company owes him.

 

What is a company applicant?

Sometimes a company needs to report information about the people that filed the document that created the reporting company. These people are called the companies applicants. There are two types of applicants. There are direct applicants and indirect applicants. A direct applicant is the person that physically filed the form that created the company. An indirect applicant is the person that was primarily responsible for directing or controlling the filing of the creation of the company.

The company needs to report one direct applicant in all cases, however an indirectly applicant only needs to be reported if there was one in the creation of the company.

However, only companies created during 2024 are required to report about the company applicants. Companies created before this time are not required.

 

What has to be reported in the BOI report?

The BOI report includes information about the company, the beneficial owners as explained before and the companies applicants if necessary.

The information about the company includes the name, and trade name, U.S. address, jurisdiction of formation in the US, and EIN. If a foreign company does not have an EIN, report a tax identification number issued by a foreign jurisdiction and the name of such jurisdiction.

 

The information about the beneficial owners includes their name, date of birth, and address.

In addition, they need to provide an image of one of the following non-expired identification documents: a US passport, state driver’s license or other state identification card. If one does not have any of these they can use a foreign passport.

 

A person can request a FinCEN identifier and use report this information on the BOI report, instead of providing the information listed above. To apply for a FinCEN identifier, an individual must provide their name, date of birth, address, and an image of an identification document.

 

When is the filing due?

1. If the company was organized before January 1st 2024 – you have until the end of 2024.

2. If the company was organized during 2024 – you have 90 calendar days after receiving notice that the company’s creation or registration is effective.

3.  If the company was organized after 2024 - you have 30 calendar days after receiving notice that the company’s creation or registration is effective.

4. If your company previously qualified for an exemption to the reporting company definition but no longer qualifies, you are required to file a BOI report within 30 calendar days of the date on which your company stops qualifying for the exemption.

 

Penalties – if the form is not filed on time, or if the report has inaccurate information, penalties can be assessed on the owners of the company. If a report had inaccurate information, it should be amended within 90 days of the original due date of the report.

 

How to file the BOI report?

It must be filed online at the FINCEN’s website.

Here is the link to fill it - https://boiefiling.fincen.gov/fileboir

 

What happens when there is a change to the reporting company or to the beneficial owners?

The company has 30 days to file an updated BOI report to report these changes.

These changes includes when somebody has a new name or address, or if a company gets a new CEO or due to changes of ownership somebody new becomes a 25% owner of the company.

The company has 30 days from the date of the change to file the updated BOI report.

 

Similarly, the company has to correct the BOI report if it discovered any inaccuracies in the original report.

The corrected report must be filed within 30 of discovering the mistake or had reason to know of it.

 

If your company filed a BOI report and later qualifies for an exemption from the reporting requirements, your company should file an updated BOI report to indicate that it is newly exempt from the reporting requirements.

 

This is just a short summary of the rules of the Beneficial Ownership Information Report.

To get more information and rules, one should go to https://www.fincen.gov/boi