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What Is the New Beneficial Ownership Information Report Requirement for LLCs and Corporations?

On January 1st, 2024, the Financial Crimes Enforcement Network (FinCEN) launched a new website for companies to report information regarding the people who own or control them. Businesses are now required to submit this information in the form of a Beneficial Ownership Information Report (BOIR).

The Corporate Transparency Act

The new BOIR requirement comes from the Corporate Transparency Act (CTA) passed by Congress in 2021. It became effective on January 1, 2024. The intent behind the beneficial ownership information report to the U.S. Department of the Treasury is to increase companies' visibility. Greater visibility should diminish the opportunity for illegal activities like money laundering. This Act from the United States' rulemaking body applies broadly to many business entities, including small businesses and large operating companies. Under the CTA, reports are submitted to FinCEN, the government agency responsible for analyzing financial transactions in the interest of national security. There are civil and criminal penalties for failing to comply with the CTA, so review the requirements carefully.

Does My Company Need to File a BOIR?

Many business owners are scrambling to understand this new legislation and how it applies to their companies. The big question on their minds is whether or not their company needs to participate in beneficial ownership information reporting. Domestic reporting companies and foreign companies are required to file a BOIR.

Domestic Reporting Companies

Foreign Reporting Companies

  • Corporations
  • Limited liability companies
  • All entities created by filing a document with a secretary of state or any similar office in the United States.

Companies, formed under the laws of a foreign country, that registered to do business in the United States by filing a document with a secretary of state or any similar office.

Notably, sole proprietorships do not fall within the above parameters. There are also exempt entities that do not need to file a BOIR. There are 23 exemptions, so review the list carefully.

When Do I File a BOIR?

When your company needs to file its BOIR depends on when you created your company.

Company Creation Date

Deadline

Before January 1, 2024

January 1, 2025

January 1, 2024 – January 1, 2025

Whichever is earlier:

90 days from the date on which your company receives actual notice of its creation or registration, or

90 days from the date on which a secretary of state or similar office first provides public notice of your company's creation or registration.

After January 1, 2025

30 calendar days from the date on which actual or public notice of the company's creation or registration is given.

How Do I File a BOIR?

Any person whom a company has authorized to act may file the company's BOIR. Filing a BOIR on behalf of your company is an electronic process that takes place on FinCEN's website. To file a BOIR, visit www.fincen.gov/boi and select “File BOIR". You have the option to complete your BOIR in PDF form or online. If you choose the PDF option, you download a form to complete and then upload the completed form to the website. If you opt to file online, you will not need to download and upload anything. Complete the online form on the website.

What Information Will I Include in My Company's BOIR?

When you complete your company's BOIR you will submit information regarding the company, its applicants, and its beneficial owners.

Reporting Company Information

Your company will need to provide the following information about itself:

  • The company's legal name and/or any DBA's or trade names
  • The address of its principal place of business
  • The company's jurisdiction of formation
  • The company's Taxpayer Identification Number

If your company is a foreign reporting company, it will report the following:

  • The address where the company conducts business in the United States instead of the address for its principal place of business
  • A tax identification number issued by a foreign jurisdiction and the name of the jurisdiction if it has not been issued a TIN in the United States

Company Applicants Information

Companies formed on or after January 1, 2024 must report information regarding their applicants. At most, your company could have two applicants. Applicants are people who either directly filed the document that created or registered the company or were primarily responsible for directing or controlling the filing.

If your company was formed on or after January 1, 2024, your company will need to provide the following information for each of its applicants:

  • The individual's name and date of birth.
  • The individual's business or residential address, depending on their status. If the company applicant works in corporate formation, you must report their business address. If they don't work in corporate formation, report their residential address.
  • An identifying number from an identification document and a photo of the document itself. Acceptable identification documents include:
    1. A U.S. driver's license.
    2. An identification document issued by a U.S. state or local government, or Indian Tribe.
    3. A passport issued by the U.S. government.
    4. A passport issued by a foreign government. This form is only acceptable if the person doesn't possess any of the above forms of identification.

The listed acceptable forms of identification must be non-expired.

Beneficial Owner Information

Beneficial owners are both people who have substantial control over a company or people who own a minimum of 25% of the ownership interests of a company. Companies need to provide the following information for each of its beneficial owners:

  • The individual's name, date of birth, and street address.
  • An identifying number from an identification document and a photo of the document itself. Acceptable identification documents include:
    1. A U.S. driver's license.
    2. An identification document issued by a U.S. state or local government, or Indian Tribe.
    3. A passport issued by the U.S. government.
    4. A passport issued by a foreign government. This form is only acceptable if the person doesn't possess any of the above forms of identification.

The listed acceptable forms of identification must be non-expired.

What if the Information I Report Changes?

Your company's reported information may change at some point. Companies are like living organisms; they're always growing and evolving. If the information you previously disclosed in your BOIR is no longer accurate, you must prepare and submit an updated report to correct any inaccuracies or add additional information. Under the new reporting rules, you must submit your updated report within 30 calendar days from the date on which the change occurred.

To file an updated report, you will follow nearly the same process as you did to submit your initial BOI report. This time, though, when you enter the BOIR form, select “Update Prior Report."

No one enjoys the hassle of new reporting requirements, but they are designed to protect people against illegal activities. Ensure that you comply with the CTA by carefully reviewing the requirements for BOIR and taking the steps necessary for your business. If you have questions, check out FinCEN's BOIR FAQ page.

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