An Introduction to Beneficial Ownership Information Reporting
In 2021, the U.S. Congress took a significant step in the fight against illicit financial activities by enacting the Corporate Transparency Act. This legislation introduces a new reporting requirement for Beneficial Ownership Information (BOI) as part of the government’s broader initiative to prevent individuals with malicious intent from hiding or benefiting from ill-gotten gains through entities like shell companies or complex ownership structures.
New Federal Reporting Requirement for BOI
Commencing on January 1, 2024, a multitude of companies operating in the United States will be obligated to disclose information about their beneficial owners—the individuals who ultimately own or control the company. This crucial information must be reported to the Financial Crimes Enforcement Network (FinCEN), a bureau under the U.S. Department of the Treasury.
Who Has to Report?
Entities mandated to report are referred to as reporting companies. If your company falls into one of the following categories, it likely qualifies as a reporting company:
- A corporation, limited liability company (LLC), or any entity created in the U.S. through filing with a secretary of state or similar office under state or tribal law.
- A foreign company registered to conduct business in any U.S. state or Indian tribe.
Who Does Not Have to Report?
There are exemptions for 23 types of entities, including publicly traded companies, nonprofits, and certain large operating companies. FinCEN’s Small Entity Compliance Guide provides checklists for each exemption, aiding companies in determining their eligibility.
How Do I Report?
Reporting companies must submit beneficial ownership information electronically through FinCEN’s website: www.fincen.gov/boi. The system will confirm receipt once the report is filed.
When Do I Report?
- If created or registered before January 1, 2024, report BOI by January 1, 2025.
- For entities created or registered between January 1, 2024, and January 1, 2025, report within 90 days of notice.
- For entities created or registered after January 1, 2025, report within 30 days of notice.
- Any updates or corrections must be submitted within 30 days.
Where Can I Learn More?
This information is taken from FinCEN’s website, but for more comprehensive guidance and additional information, visit www.fincen.gov/boi.