A Guide to FinCEN BOI, Beneficial Ownership Information

Starting January 1, 2024, most US-based businesses must report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) under the Corporate Transparency Act (CTA).

This article will explain the FinCEN beneficial ownership information reporting requirements. Continue reading to learn about the purpose of the rules and their impact on your small business. 

What Is FinCEN BOI?

The Financial Crimes Enforcement Network is an agency of the U.S. Department of Treasury. FinCEN implements rules to improve transparency and prevent financial crimes such as fraud and money laundering. 

The Corporate Transparency Act, enacted in 2021, supports government oversight of corporate financial activities. The CTA authorizes FinCEN to establish new reporting requirements. 

Under the CTA, FinCEN published the Reporting Rule (effective date January 1, 2024). The Reporting Rule requires businesses to comply with beneficial ownership information (BOI) reporting requirements. Companies that meet specified requirements will file FinCEN BOI reports starting January 1, 2024. 

What Is the FinCEN BOI Report?

The FinCEN BOI report is an informational filing submitted through FinCEN’s website. Every business that meets the reporting requirements should submit a BOI report.

The BOI report should list information about individuals who own a large portion of the business or have significant control over business operations. 

Importance of FinCEN BOI Compliance

FinCEN aims to protect the U.S. financial system by implementing BOI reporting rules. 

Beneficial ownership information reporting gives the Treasury insight into the ownership and control of U.S. businesses. The U.S. government can identify individuals who benefit financially from business operations. 

Benefits of BOI in Preventing Money Laundering and Illicit Activities

FinCEN published a fact sheet illustrating the purpose of the new reporting obligations. The benefits of BOI reporting include the following: 

• Discouraging illegal financial activities, such as fraud and money laundering
  
• Preventing tax evasion
  
• Protecting the U.S. economy and national security
  
• Supporting law-abiding business owners

Types of Entities Covered Under BOI

Which legal entity types should file a FinCEN BOI report? 

FinCEN’s BOI reporting rules define a “reporting company” as any of the following: 

• Corporation
  
• Limited liability company (LLC)
  
• US-based business formed by registration with a Secretary of State (or equivalent authority)
  
• Foreign operating company registered with a U.S. Secretary of State (or equivalent authority)

FinCEN estimates more than 32 million businesses will be subject to the reporting rules. 

However, several types of companies should not file. FinCEN’s small business compliance guide lists 23 exemptions. 

Who Is Exempt from BOI Reporting?

Many businesses are already subject to strict reporting obligations and will not need to file FinCEN BOI reports. 

For example, large operating companies are exempt from BOI reporting. Large operating companies represent businesses with more than 20 full-time employees and $5 million in gross receipts. The company must operate a U.S. office. 

Other exempt businesses include the following:

• Insurance companies
  
• Financial institutions
  
• Public accounting firms
  
• Publicly traded companies
  
• Tax-exempt non-profit entities

We recommend consulting with accounting professionals to determine whether your business is exempt. 

Key Components of Beneficial Ownership Information Reporting

What Does the FinCEN BOI Report Include?

Your FinCEN BOI report provides information about your company and its beneficial owners. Reporting companies created after January 1, 2024, should include information about company applicants. 

You should expect to submit the following information about your company:

• Business name (and trade names, if any)
  
• U.S. business address
  
• State of registration
  
• Taxpayer ID

Identification of Beneficial Owners

Who qualifies as a beneficial owner?

Beneficial owners are individuals who own at least 25% of the company or who have substantial control over the company. 

FinCEN defines “substantial control” as holding a senior officer (or equivalent) role or having authority to determine the company’s officers.

Additionally, individuals who can influence the company’s financial, structural, or business decisions have substantial control. Businesses with complex corporate structures or multiple owners should consider FinCEN’s beneficial ownership criteria carefully. 

What Beneficial Owner Information Should You Report?

Your BOI report should provide the following information about your company’s beneficial owner(s): 

• Legal name
  
• Birth date
  
• Address
  
• Passport or state ID number

BOI reporting requirements allow beneficial owners and businesses to request unique identifying numbers (FinCEN identifiers). Reporting companies and owners can use their FinCEN identifiers instead of personal information on BOI reports. 

What Is an Example of Beneficial Ownership?

Consider a reporting company with two owners, each holding a 50% ownership interest. The company should report both owners on its FinCEN BOI report. 

Other examples of beneficial ownership include the following: 

• General counsels who provide critical legal advice
  
• CFOs who assist with long-term financial planning
  
• Board members who hire the CEO
  
• Individuals who perform the above activities, regardless of title

What Is a Company Applicant?

A company applicant is the person who files the business registration with the Secretary of State. 

BOI reports allow up to two company applicants. If multiple individuals support your registration filing, include the person who submits the registration document and the person responsible for its contents. 

Remember, only businesses registered in 2024 or later should provide company applicant information.

How BOI Reporting Affects Your Small Business

If your business qualifies as a reporting company, you should file an initial report before the deadline. 

You should review the eligibility criteria and reporting requirements. Schedule sufficient time to gather the required information for the report.

Fortunately, you won’t need to file the BOI report every year. After filing the initial report, your business will only need to file subsequent reports to communicate changes to the initial submission. 

For example, your company should file a subsequent report to disclose officer changes.

How to File the FinCEN BOI Report

Ready to file your BOI report? You can file through FinCEN’s website after January 1, 2024. Visit www.fincen.gov/boi to submit your beneficial ownership information. 

After filing your report, you’ll receive a filing confirmation. You should save the confirmation for your records. 

Deadlines for Filing

Your initial FinCEN BOI report deadline depends on your business registration date. Refer to the following due dates to determine when you should file. 

• Companies registered before January 1, 2024: December 31, 2024

• Companies registered in 2024: Within 90 days of registration

• Companies registered in 2025: Within 30 days of registration

Additionally, businesses have 30 days to correct inaccurate reports or submit updates.

What Is the FinCEN Final Rule for Beneficial Ownership Information Reporting?

On November 29, 2023, FinCEN published an amendment to the reporting rule. The amendment is a final rule for BOI reporting. (FinCEN can issue multiple final rules in response to feedback from industry professionals.)

The November 29th final rule extends the BOI report deadline for reporting companies registered in 2024. FinCEN changed the filing requirement to 90 days after initial registration. Previously, companies registered after January 1, 2024, had 30 days to file an initial BOI report.

Starting January 1, 2025, new companies will have 30 days to file an initial BOI report.

Penalties for Non-Compliance

Companies could face civil or criminal penalties for failure to file timely. FinCEN could impose monetary fines or imprisonment of individuals responsible for fraudulent reporting. 

Staying Informed Regarding the Latest FinCEN BOI Reporting Requirements and Updates

Small Business Resources

FinCEN has published several guides and resources to help small business owners prepare for the new reporting requirements. 

FinCEN’s BOI Brochure explains the new rule in a digestible format. If you have specific questions about how the BOI reporting requirements apply to your business, you can review the BOI reporting FAQ. 

Further, the 56-page small entity compliance guide covers definitions and detailed examples. 

Potential Changes or Updates to BOI Regulations

Several professional accounting organizations submitted comments in response to the reporting rule. Practitioners have requested additional guidance and extensions on compliance requirements.

FinCEN continues to respond to feedback from affected businesses and industry professionals. 

Industry and Regulatory Expectations for the Future

FinCEN has not suggested changes to the final rule but continues to monitor comments. The latest rule change was on November 29, 2023, and we could still see further amendments in early 2024. 

Additionally, Congress is currently considering legislation to relieve reporting deadline pressure. Congress could enact additional rules affecting business owners. 

Challenges and Potential Solutions for Implementing BOI Requirements

Is your business ready to comply with beneficial ownership reporting requirements? 

Small businesses may encounter various challenges. Companies will need to invest sufficient time to understand the rules and applicability. Hiring legal counsel can represent a financial burden.

We recommend consulting with accounting professionals to determine your reporting deadline and identify your beneficial owners. 

Consult a Professional Small Business Accountant

Small business accountants can help you understand what information to gather and how the rules apply to your company. 

Third-party service providers can also submit the BOI report on your company’s behalf. Professional accountants can help you track due dates and stay compliant.

Schedule a free consultation with 1-800Accountant to learn how to prepare for the new reporting requirements.