At the beginning of 2024, the U.S. Government started requiring U.S. companies and many small businesses to file Beneficial Ownership Information (BOI). In this blog post, we detail the following BOI information, so you know where you and your company stand:
- What is Beneficial Ownership Information (BOI)?
- Who needs to file?
- When are the filing deadlines?
- Recent Legal Changes
- How to file a BOI
As always, contact your Accounting and/or Legal counsel for information specific to your company.
What is Beneficial Ownership Information (BOI)?
Beneficial Ownership Information refers to data that identifies the individuals who ultimately own or control a legal entity (think corporations, LLCs, and other similar entities). The purpose of collecting this information is to prevent and combat money laundering, terrorist financing, and other illegal activities that can be facilitated through anonymity in corporate structures.
The Corporate Transparency Act (CTA), enacted as part of the broader Anti-Money Laundering Act of 2020, introduced new reporting requirements aimed at enhancing transparency and curbing illicit financial activities. A key component of the CTA is the Beneficial Ownership Information (BOI) filing requirement, which affects a significant number of small business entities in the United States.
Who Needs to File?
The CTA requires many companies doing business in the United States, particularly small businesses and entities that are not publicly traded, to report their beneficial ownership information. This includes corporations, limited liability companies (LLCs), and other similar entities formed or registered to do business in the U.S. Entities that qualify for an exemption, such as certain trusts, are not required to file.
When are the Filing Deadlines?
- Companies that were created or registered to do business before January 1, 2024, will have until January 1, 2025, to file their initial BOI report.
- New companies created or registered in 2024 will have 90 calendar days to file after receiving actual or public notice that its creation or registration is effective.
- A reporting company created or registered on or after January 1, 2025, will have 30 calendar days to file after receiving actual or public notice that its creation or registration is effective.
Recent Legal Changes
A recent court ruling has altered the BOI filing landscape for some entities. On March 1, 2024, a federal district court in Alabama ruled in National Small Business United v. Yellen that the CTA is unconstitutional, exempting the plaintiffs from the BOI filing requirements. However, this ruling currently applies only to the plaintiffs and members of the National Small Business Association as of March 1, 2024. All other entities not falling within the 23 exemption categories or not affected by this ruling are still required to file their BOI reports according to the federal deadlines.
The following table from the Financial Crimes Enforcement Network summarizes the 23 exemptions:
| Exemption No. | Exemption Short Title |
| 1 | Securities reporting issuer |
| 2 | Governmental authority |
| 3 | Bank |
| 4 | Credit union |
| 5 | Depository institution holding company |
| 6 | Money services business |
| 7 | Broker or dealer in securities |
| 8 | Securities exchange or clearing agency |
| 9 | Other Exchange Act registered entity |
| 10 | Investment company or investment adviser |
| 11 | Venture capital fund adviser |
| 12 | Insurance company |
| 13 | State-licensed insurance producer |
| 14 | Commodity Exchange Act registered entity |
| 15 | Accounting firm |
| 16 | Public utility |
| 17 | Financial market utility |
| 18 | Pooled investment vehicle |
| 19 | Tax-exempt entity |
| 20 | Entity assisting a tax-exempt entity |
| 21 | Large operating company |
| 22 | Subsidiary of certain exempt entities |
| 23 | Inactive entity |
** The category titles listed above are generic. Consult a professional to see if your business qualifies under the exemption. For example, only certain accounting firms qualify under the exemption. So better to check than assume.
The introduction of the BOI filing requirement represents a significant shift towards greater corporate transparency and accountability, with implications for millions of businesses across the nation. It’s important as a small business owner to stay informed about these requirements and consult with legal counsel or your financial professional to understand how the CTA and recent legal changes may impact on their filing obligations.
How to File a BOI
- Identify Beneficial Owners: Collect information on all individuals who own or control at least 25% of the company or have significant responsibility to control, manage, or direct the company
- Gather Necessary Information: For each beneficial owner, you’ll need their full legal name, date of birth, home address, and a photocopy of their identification document, such as a driver’s license or passport.
- Create a FinCEN ID: Although optional, obtaining a FinCEN ID can streamline the filing process. You can create one through the BOI E-Filing System1.
- Use the BOI E-Filing System: File your BOI report using the online system provided by the Financial Crimes Enforcement Network (FinCEN). https://boiefiling.fincen.gov/boir/html
- Seek Professional Advice: If you’re unsure about any aspect of the BOI filing process or prefer to have your tax/accounting professional handle it, we recommend consulting with your legal or financial services professional who can provide guidance tailored to your business situation.
For more information about the BOI and if you’re eligible, contact your Legal Counsel or Tax Professional, or visit the official government website: https://www.fincen.gov/boi
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