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

Navigating the Beneficial Ownership Information (BOI) reporting requirements can be intricate, particularly for small business owners delving into these complex regulations for the first time. However, adhering to these new reporting obligations is crucial to preempt potential issues in the future.

Neglecting to file when required could expose your business to vulnerability, allowing illicit actors to exploit your company for illegal purposes, leading to penalties and even criminal charges. This breakdown aims to elucidate who needs to file a BOI report and assist you in gaining a clearer understanding of these requirements, empowering you to make informed decisions.

Purpose of BOI Reporting:
The BOI reporting requirements aim to enhance transparency regarding the actual owners and controllers of private companies in the United States. While many businesses operate transparently, a lack of visibility into company ownership has facilitated illicit activities and financial crimes.

By disclosing information about company ownership, law enforcement and regulators can more effectively identify and prevent criminal schemes that utilize shell companies to conceal identities and launder funds. If you represent a business, understanding whether you need to file a BOI report for your company is imperative.

Companies Obligated to File BOI Reports:
Not all companies are required to file BOI reports. Certain exempt entities, including some publicly traded companies, most financial institutions, investment funds, and specific non-profit organizations, are not considered reporting companies. There are 23 separate exemptions.

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

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

Exemptions:
Details about exempted entities are available on the FinCEN website. Some examples of exempt companies and entities include certain tax-exempt entities, specific venture capitalist fund advisers, registered public accounting firms meeting certain criteria, and large operating companies meeting specific conditions.

Qualification as a Beneficial Owner:
A beneficial owner is any individual who directly or indirectly exercises substantial control over the reporting company or owns or controls at least 25% of the company’s ownership interests. Reporting companies must provide identifying information about each beneficial owner to FinCEN, including their name, address, birth date, and identification number from an acceptable document.

Determining If You Must File a BOI Report:
To ascertain if your business is a reporting company required to file a BOI report, consider the following questions:

1. Did you file documents with a Secretary of State or a similar office to create or register your company?
2. Does your company have any individual who owns or controls at least 25% of its ownership interests?
3. Does your company have any senior officer who exercises substantial control, like a CEO or President?
4. Is your company of a type that is exempt from reporting, such as a non-profit, bank, or publicly traded company?

If your answers align with the first two questions as “yes” and the last question as “no,” your company likely qualifies as a reporting company obligated to submit beneficial ownership information to FinCEN starting January 1, 2024.

Learn More About How BOI Fi Can Help Your Business with Filing A BOI Report:
To ensure successful and accurate fulfillment of filing and reporting requirements, BOI Fi offers expert advice and patented technologies. BOI Fi is a comprehensive filing tool for company reports and informational forms, including foreign bank account reports, annual reports, registered agent services, and BOI reports under the Foreign Account Tax Compliance Act.

If you need assistance filing a BOI report for your business, BOI Fi can provide the necessary support. Contact us today.