BOI
Accounting

Is Your Company Subject to Beneficial Ownership Information Reporting?

By David A. Lopez


Beneficial Ownership Information (BOI) reporting is a new requirement established under the Corporate Transparency Act (CTA) of 2021. The CTA was created to help the US government prevent illegal activities like money laundering, human trafficking and income tax evasion. The BOI report includes details about the individuals who own or control businesses that operate in the US and is intended to minimize the types of activities that threaten fair business practices.

Reporting Process

Companies that are required to report will disclose within the BOI report the following information:

  • Legal name
  • Any trade or doing business as name(s)
  • Employer Identification Number – EIN or TIN
  • Full legal address
  • Type of BOI filing

In addition to providing information on the business entity, each individual who is a beneficial owner must report:

  • Full legal name
  • Full date of birth
  • Full legal address
  • Valid form of identification –
    passport, driver’s license, etc.

 A beneficial owner is defined as any individual who (1) owns at least 25% of the reporting company’s ownership interest and (2) exercises substantial control over the reporting company (corporate officer, major shareholder, key employee or board chair).

The reporting form can be completed directly on the Financial Crimes Enforcement Network (FinCEN) website at fincen.gov by the published due dates. Currently, the reporting deadline is Jan. 1, 2025, for all entities registered to do business before Jan. 1, 2024. Businesses created on or after Jan. 1, 2024, but before Jan. 1, 2025, must report within 90 days of formation. Any company created on or after Jan. 1, 2025, will have a deadline of 30 days after formal registration.

Who Is Exempt?

For some business entities, this new reporting requirement has been waived. FinCEN has identified the following 23 types of entities that are exempt from the BOI reporting requirements:

  • Securities reporting issuers
  • Governmental authority
  • Bank
  • Credit Union
  • Depository institution holding company
  • Money services business
  • Broker or dealer in securities
  • Securities exchange or clearing agency
  • Other Exchange Act registered entity
  • Investment company or advisor
  • Venture capital fund advisor
  • Insurance company
  • State-licensed insurance producer
  • Commodity Exchange Act registered entity
  • Accounting firm
  • Public utility
  • Financial market utility
  • Pooled investment vehicle
  • Tax-exempt entity
  • Entity assisting a tax-exempt entity
  • Large operating company – a company that has at least 20 full-time employees, more than $5 million in gross revenue, and a physical office in the US
  • Subsidiary of certain exempt entities
  • Inactive entity
  • Penalties for Failing to File

Any person or entity that willfully fails to file the BOI report may be subject to civil penalties of $500 per day and criminal penalties including a $10,000 fine and/or up to two years in prison.

Because BOI reporting is complex and confusing, the Treasury Department has allowed reporting entities to make updates and corrections within 90 days of the original deadline of the report. 

Businesses and beneficial owners should visit the FinCEN website and read the information provided by the Department of Treasury.

About the Author: David A. Lopez, CPA, is the managing member of David A. Lopez & Co., LLC. He can be reached at [email protected].

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