Guide to Beneficial Ownership Information Reporting

As a business owner, you must comply with all regulations and keep your company ahead of the competition. Staying compliant has become even more crucial with the new beneficial ownership information rule that took effect on Jan. 1, 2024. This guide explains what BOI reporting means, what your report should include and who must participate.

What Is the Beneficial Ownership Information Reporting Rule?

Congress enacted the beneficial ownership information rule as part of the Anti-Money Laundering Act of 2020 to improve compliance and prevent financial crimes. The rule applies to U.S.-based small businesses and encourages the reporting of critical information about your entity's beneficial owners. It aims to enhance accountability and transparency, minimizing misuse of the U.S. financial system.

BOI reporting involves identifying the people who directly or indirectly own or control your company. You should report this information to the Financial Crimes Enforcement Network as the Corporate Transparency Act requests.

What Is a Beneficial Owner?

You may identify a beneficial owner in two ways, according to the Corporate Transparency Act:

1. Someone who directly or indirectly owns or controls a minimum of 25% of the company's ownership interests
2. A person who directly or indirectly has substantial control over the company

There are various examples of what might define an individual with substantial control, including:

A decision-maker for your company
Someone with the authority to remove or appoint corporate directors or officers
A person serving as president, senior officer, CEO, CFO or any other executive with a similar amount of authority

Who Is Exempt From Beneficial Ownership Reporting?

Twenty-three types of companies are exempt from reporting beneficial ownership, typically because they already have several other state or federal regulations to meet. While you may access the more comprehensive list from FinCEN's small entity compliance guide, here are a few examples:

Banks
Insurance companies
Credit unions
Tax-exempt entities
Securities reporting issuers
Accounting firms
Public utilities

Beneficial Ownership Information Reporting Requirements

BOI report filing has various requirements, timing, identification criteria and other information you should include. Let's simplify the essential aspects you need to know to help you meet the initial filing deadline.

What Companies Should Report BOI?

Two primary company types should report BOI.

Domestic reporting companies: These are limited liability companies, corporations and other entities created from filing a document with a secretary of state in the U.S.
Foreign reporting companies: These entities form under a foreign country's law and register to operate in the U.S. by filing a document with a secretary of state.

What Information Should You Include in Your BOI Report?

Your BOI report should include three main areas of information.

1. Company information: This section requires you to list your company's registered name, relevant trade names, current street address, taxpayer identification number and jurisdiction of registration or formation.
2. Beneficial owners: This section should include each owner's name, residential address, birthdate, the number from an acceptable ID document such as a passport or driver's license and the issuing state or jurisdiction of the ID document.
3. Company applicants: You must also provide your company applicants' name, identification number, birthdate and residential address.

You can provide four acceptable forms of ID to meet reporting requirements.

1. A current U.S. driver's license
2. A current U.S. or Native tribe-issued identification document
3. A current U.S. passport
4. A valid passport issued by a foreign government

When Is the Beneficial Ownership Report Deadline?

If you formed your company or registered to do business before Jan. 1, 2024, you have until Jan. 1, 2025, to submit your initial BOI report. If you created or registered your company after Jan. 1, 2024, and before Jan. 1, 2025, you'll have a 90-day filing window, starting from the date you receive notice that your business registration or creation is effective.

After Jan. 1, 2025, all reporting companies will have 30 calendar days to file their beneficial ownership report forms after receiving notice of the company's registration or creation or when changing their beneficial ownership information.

Penalties for Non-Compliance

The penalties can be significant if you deliberately avoid filing, correcting or updating your BOI report or willfully provide false beneficial ownership information. The penalties you may face for these violations include:

$500 for each day you continue to violate the rule as part of a civil penalty
Two years in prison and a fine of up to $10,000 in cases of extreme criminal penalties

BOI Challenges and Solutions

Whether you want to know how to fill in the beneficial ownership report or understand how much time you have to complete the form, this section will provide you with all the information you need to fill out this document accurately and file it on time.

How to Get a Beneficial Ownership Report

If you meet the requirements to report your company's BOI, getting a beneficial ownership information report is a simple online process, you can get started by completing our BOI report form.

Why You Might Need Help With Your Beneficial Ownership Report

The beneficial ownership ensures small businesses across the U.S., especially limited liability companies and similar entities, comply with the laws.

It's easy for small business owners and solopreneurs to overlook all the requirements. If you need to maintain your BOI compliance, assistance from the knowledgeable experts at Firstep Business Solutions can help you reduce issues and confidently file your report.

Complete Your BOI Report Filing With Firstep Business Solutions

Complying with the new beneficial ownership rule is essential for avoiding non-compliance penalties. At Firstep Business Solutions, we understand small business owners' challenges in staying informed and standing out in a crowded market.

Our experts will simplify the filing process while ensuring all the information is accurate, allowing you to focus on growing a successful and compliant business. Get started today for enhanced BOI compliance!