A New Federal Filing Requirement for Businesses from the U.S. Treasury

Beneficial Ownership Information logo

In 2020, a bipartisan Congress passed the Corporate Transparency Act. This law created a new reporting requirement of “Beneficial Ownership Information” (BOI) to make it harder for bad actors to hide or launder money or benefit from ill-gotten gains through shell companies or other opaque ownership structures.

The U.S. Treasury Financial Crimes Enforcement Network (FinCEN) administers the reporting. Although the information reported to FinCEN will be stored in a secure, non-public database under rigorous security methods and controls used to protect non-classified yet sensitive information, access to the data will be permitted to Federal, State, local, and Tribal Officials for purposes related to national security, intelligence, and law enforcement.  

A company created and doing business before January 1, 2024, has until January 1, 2025, to file its BOI report. If your company was created in 2024, you have 90 days to file after receiving confirmation, or public notice, that the company is registered and legal to operate.

Failure to file this BOI report can result in criminal and civil penalties with fines of up to $500 per day.

Two types of companies are required to comply with reporting requirements.

*Domestic reporting companies are corporations, limited liability companies, and any other entities created by filing a document with a secretary of state or similar office in the United States.

*Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that has registered to do business in the United States by filing a document with a secretary of state or similar office.

While the domestic and foreign company filing requirements look to be all-encompassing, there are twenty-three types of entities that are exempt from reporting:

List of exempt entities from the BOI filing

The filing requires the reporting company to identify the beneficial owner and individuals who exercise substantial control.

A beneficial owner is an individual who either directly or indirectly: (1) exercises substantial control over a reporting company, or (2) owns or controls at least 25 percent of a reporting company’s ownership interests. Because beneficial owners must be individuals (i.e., natural persons), trusts, corporations, or other legal entities are not considered to be beneficial owners. However, in specific circumstances, information about an entity may be reported in lieu of information about a beneficial owner.

* The individual is a senior officer (the company’s president, chief financial officer, general counsel, chief executive officer, chief operating officer, or any other officer who performs a similar function).

* The individual has the authority to appoint or remove certain officers or a majority of directors (or similar bodies) of the reporting company.

* The individual is an important decision-maker for the reporting company.

* The individual has any other form of substantial control over the reporting company, as explained further in FinCEN’s Small Entity Compliance Guide.

Filing The Form

The form is quite simple to complete if you have the following information at hand. You should have a scanned JPG or PDF of your driver’s license or other government-issued ID saved in your computer.

List of items needed to file the BOI report.

To file, go to https://boiefiling.fincen.gov/fileboir. There, you will have the choice to create a PDF and file it or fill out the form directly online.

Screen shot of the BOI page showing the PDF and WEB filing options.

If you need help understanding the form, several YouTube videos produced by CPAs and attorneys walk you through it step-by-step; just type BOI Report Form into the browser.

NOTE: The online form has functional dropdown menus, allows you to upload your ID, will check for missing information, and has a simple submit button at the end. However, if you are interrupted during the process and must leave the site, you will have to start over again when you return. A small, single-owner corporation or LLC filing should take only five minutes to complete.

FinCEN Identification Number

A FinCEN ID is a unique identifying number issued to an individual by FinCEN. Although there is no requirement to obtain a FinCEN ID, doing so can simplify the reporting process by reducing the number of duplicate forms you must file if you own multiple companies. To obtain a FinCEN ID, go to https://fincenid.fincen.gov/landing.

More information about the BOI filing can be found on this Frequently Asked Questions page: https://www.fincen.gov/boi-faqs#M_1.

At Business Finance Corporation, we work to help you maintain success. We factor accounts receivables to improve cash flow and stay informed on the latest business trends to assist in business-making decisions. Please forward this link (BOI Reporting) to your friends in the business to alert them of this federal requirement.

Your Partner in Success,

David Cabral