Beneficial ownership information (BOI) beginner's guide and how to file

Where to begin on beneficial ownership reporting

Simply put, as of Jan. 1, 2024, many businesses will be required to report information about their company’s beneficial owners to the Financial Crimes Enforcement Network (FinCEN), which is under the aegis of the U.S. Department of the Treasury.

Beneficial ownership information (BOI) refers to information about any individual — or individuals — who own or control a company. The legislation that is the driving force behind this action for business owners required to take this action is the Corporate Transparency Act.

Specifically, a beneficial owner is someone who:

• Directly or indirectly exercises substantial control of a business
• Owns or controls at least 25% of a company’s ownership interest

But what is the big picture behind why this information is being collected? BOI reporting is intended to address issues such as money laundering, corruption, and terrorism financing. To proactively hamper this type of activity, businesses disclose ownership information, including name, home address, and provide a copy of a government-issued I.D. to validate the information provided.

Though many organizations may be wondering how this fits into their ever-growing to-do list, keep in mind that a beneficial ownership information report only needs to be submitted once unless there are changes in the ownership of the business. So, it’s different from an employer being responsible for annually sending W-2s to employees or having each new hire complete a W-4 when they join a company.

Now that we better understand what a BOI is, let’s begin to unpack the actual information it shares and who needs to file it.

What are the BOI requirements?

Though these rules have picked up a lot of steam, not every business will be required to submit a BOI report. However, it’s essential that you understand the requirements and whether your business will need to file a report, or is considered an exempt entity. There are several types of entities that are exempt from BOI reporting, so it’s important to first determine whether your business is required to file an initial report.

Companies that are required to file a BOI

Who should become familiar with BOI reporting? Those businesses which likely need to take a closer look include corporations, limited liability companies, and any other entity that is created by filing a legal document with the Secretary of State’s office where the business is located.

In addition, both domestic and foreign companies licensed to do business in the U.S. are required to provide a BOI to FinCEN.

What is the deadline to file?

Business owners need to be aware of several deadlines, so that there is no doubt about buttoning up their BOI:

• For businesses that were created or registered to do business before January 1, 2024, the deadline to file the initial beneficial ownership information report is January 1, 2025
• For reporting businesses that were created or registered to do business after January 1, 2024, the initial report is due within 90 calendar days after the initial business creation or registration
• For a business created or registered after January 2025, the business will have 30 calendar days after the business is registered to submit their initial BOI report

How do I determine if I am a beneficial owner?

If your company is required to report BOI, you’ll need to determine who the beneficial owners of the company are. As we mentioned a bit earlier, a beneficial owner is someone who exercises substantial control of the business or owns or controls at least 25% of the business ownership. While this gives us a broad understanding of where to begin, let’s get into more detail in the context of your situation.

Substantial control

First, we’ll cover the subject of substantial control. According to FinCEN, anyone who exercises substantial control of a business must meet one of the following four criteria:

• Is a senior officer of the company including President, Chief Financial Officer, General Counsel, Chief Executive Officer, or Chief Operating Officer
• Retains the ability to appoint or remove any senior officer, board of directors, or similar body
• Has decision-making status and can make decisions that directly impact the operation of the business, including nature and scope, financial decisions such as securing a mortgage or other significant expenditures, and has the authority to reorganize, dissolve, or amend business operations
• Maintains any other type of control of a business that may not include any of the above

Ownership interest

Additionally, there is ownership interest. Specifically, this points to a certain percentage, meaning that any person who owns or controls 25% of a business is required to be identified. Ownership examples include any person:

• Who owns at least 25% of the equity, stock, or voting rights
• That has an established interest in the assets or profits of a business
• Who has related ownership interest through any instrument convertible into equity, stock, voting rights, or capital or profit interest
• That has an option or privilege of buying or selling equity, stock, or voting rights, capital or profit interest, or convertible instruments
• That maintains control of any other instrument, contract, arrangement, understanding, relationship, or mechanism to establish company ownership

Who is exempt from BOI?

There are currently 23 types of entities that are exempt from beneficial ownership information reporting requirements. For reference, you can see each type in the table below.

That said, if questions come up or you are unsure if your business is one of the eligible exemptions listed above, it’s best to check with FinCEN before choosing not to complete BOI reporting.

Now that we have covered how to determine if BOI reporting is a task that should be on your radar, once the report is complete, let’s find out how to file with FinCEN.

Filing your BOI

There are several steps to follow when filing your BOI, starting with determining whether your business is required to complete a BOI in the first place. We covered this above in more detail.

Step one: Figure out if you need to file

Before completing a report, be sure to check FinCEN guidelines to determine whether you need to file a BOI report. In addition to what we covered earlier in this article, FinCEN also has a comprehensive Small Entity Compliance Guide.

Step two: Determine who the beneficial owners and applicants are so that you can add them

If your company is required to file, be sure you can correctly identify all beneficial owners and applicants, since that information will be needed to complete your report. To review, a beneficial owner is someone who exercises substantial control of the business or owns or controls at least 25% of the ownership of the business. The company applicant is the person who was responsible for filing the first registration document with the state or jurisdiction where the business is located.

Step three: Organize the information you’ll need to add to the form

When filing your BOI, you’ll need to include the following details:

Information about the business

• The full legal name of the business
• Any trade name or DBA
• Complete current US address
• State of business formation
• Jurisdiction of business formation if a foreign business

Information about the beneficial owners and company applicants

The following information must be reported for all beneficial owners, as well as company applicants.

1. Full legal name
2. Date of birth
3. Complete current address
4. Identifying number and issuing jurisdiction along with an image of one of the following:
   • U.S. Passport, unexpired
   • State Driver’s License, unexpired
   • Identification document issued by a state, local government, or tribe, unexpired
   • Foreign passport, unexpired (if none of the above documents are available)

Step four: How should you submit your BOI?

Now that you have all the details in order, it’s time to get your BOI report from Point A to Point B. Companies must submit their beneficial ownership information online through the Financial Crimes Enforcement Network website. They can do this in one of two ways:

1. You can download a PDF of the BOIR report form, and complete it offline. and When finished, upload it to the FinCEN website. Here is the page to upload the PDF once it’s completed. And here’s a screenshot — you can drag it or upload the file.

2. File online using the online reporting system. When you have the information ready, the page to submit online is here.

You’ll know you are in the right place when you see this screen:

Once you click “I Agree” you should reach a page where you can click “Initial Report,” and get started on adding your information (it looks like the page below):

There are additional resources in the FinCEN help center with detailed step-by-step instructions, including screenshots that help walk you through all the details.