In 2021, Congress enacted the Corporate Transparency Act. This law creates a Beneficial Ownership Information (BOI) reporting requirement as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.
New requirements start Jan. 1, 2024
Beginning on January 1, 2024, many companies in the U.S. will have to report information about their beneficial owners. Beneficial owners are the individuals who ultimately own or control the company. Companies must report will report the information to the Financial Crimes Enforcement Network (FinCEN). FinCEN is a bureau of the U.S. Department of the Treasury.
Generally speaking, companies structured as corporations, LLCs, and those created by filing a document with the secretary of state or similar office under the law of a State or Indian tribe are likely required to report BOI. For the organization, BOI information includes legal names, DBAs, addresses, TIN, and other basic information.
The information being collected for individual beneficial owners helps establish the identity of the individual. It includes birth date, residential address, and identifying number and image of government-issued documentation (driver’s license, passport, etc.). For reporting entities, a beneficial owner is defined as an individual who either directly or indirectly:
- Exercises substantial control over the reporting company (i.e. senior officer, important decision makers, individuals with appointment or removal authority), or
- Owns or controls at least 25% of the reporting company’s ownership interests (i.e. equity, stock, voting rights, convertible instruments, capital or profit interest, options, and the like)
The reporting requirements for BOI are not difficult to understand. But there are some fine points that businesses should be aware of as they begin the process. It could also take some time to assemble the documentation required. So it is advisable that businesses develop a reasonable plan for completing their submission.
FinCEN has created a number of materials to assist in the transition, including guides and videos. Although the system being developed by FinCEN to collect the information is not available yet, their guides should be helpful in assisting business owners as they determine their status for beneficial owner reporting. We’ve included the links below to help you get started:
- FinCEN website landing page for BOI
- Introduction to BOI – Overview guide with FAQs and reporting timelines
- Videos providing an overview of BOI
- Small Entity Compliance Guide
- Determing whether or not your business is required to report its beneficial owners begins on page 1.
- Exempt entities are described on page 4.
- Page 38 includes the information required of the Reporting Company and the Beneficial Owners and Company Applicants that will need to be collected and submitted.
- Page 42 includes the timeline for business entities created before Jan. 1, 2024 and for those created after that date.
- Contact form for BOI questions