If you’re a business owner, you should know that starting January 1, 2024, you may be required to file a new report with the U.S. Department of Treasury’s Financial Crimes Enforcement Network, also known as FinCEN. The new report is called a Beneficial Ownership Information (BOI) report, and it provides FinCEN information about the owners of your business.  

Why do I Need to File a Beneficial Ownership Information Report?

Congress created the beneficial ownership requirements as part of the Corporate Transparency Act. They enacted this law to prevent money laundering, financing terrorism and tax fraud. In this act, Congress states that one way people hide their involvement in these crimes is by concealing their ownership in corporations, LLCs or similar entities in the United States. 

As a result, Congress has decided that businesses will be required to disclose all of their beneficial owners. FinCEN will share this information with the appropriate government agencies, financial institutions (like First Alliance) and financial regulations. This information will help the Federal Government uncover entities created for illicit purposes. 

Most financial institutions already require this information for your business to do things such as opening a new business account or applying for a business loan. 

Who is a Beneficial Owner? 

A beneficial owner is someone who owns or controls at least 25% of the company’s ownership interests. 

Who has to File a Beneficial Owner Information Report? 

According to the FinCEN website, every LLC, corporation or other entity created by the filing of a document with a Secretary of State or a similar office under the law of state or Indian tribe is required to file a Beneficial Ownership Information report unless it qualifies for an exemption. This requirement mostly applies to companies created in the United States. However, some entities created in foreign states and registered to do business in this country must also file a BOI report. 

Does Anyone Else Have to File a Beneficial Ownership Information Report?

Any company created on or after January 1, 2024, must also report the company applicants as well as the beneficiary owners. A company applicant is the person who directly files the document that creates, or first registers, the reporting company, and the person who is primarily responsible for directly or controlling the filing of said document if more than one person was involved in filing it.  

What Entities are Exempt From the Beneficial Ownership Requirement?

According to FinCEN, 23 types of entities are exempt from the new requirements concerning beneficial ownership reporting. Most of these exemptions are due to the fact that the entities in question already must report similar information to the federal government due to other regulations.

These exempt business types include entities such as: 

• Credit unions
• Banks
• Accounting firms
• Public utilities
• Governmental authorities

Large operating companies are also exempt from the BOI requirement. In order to meet the criteria for a large operating company, a business must: 

• Employ more than 20 full-time employees in the United States
• Have an operating presence at a physical office located in the United States
• Have filed a United States federal tax or information return showing over $5 million in gross receipts or sales in the previous year. 

Inactive entities are also exempt from the BOI requirement. 

What Information Should be Reported on a Beneficial Ownership Information Report?

A BOI report will require the following information for every beneficial owner:

• Full legal name
• Date of birth
• Complete current or residential street address
• Unique identifying number and issuing jurisdiction from any of the following documents:
• United States passport
• State or local I.D. document
• Driver’s license
• A foreign passport
• An image of the document that shows the unique identifying number

The report will also require information about the company, including:

• The company’s full legal name
• Its complete and current street address at its place of doing business
• All trade or “doing business as” names
• Jurisdiction of formation
• Taxpayer identification number

How do I File a Beneficial Ownership Information Report?

You can file a Beneficial Ownership Information report electronically on the FinCEN website. 

When does the Beneficial Ownership Information Report Have to be Filed? 

If a company was created before January 1, 2024 and is not exempt, it must file an initial Beneficial Ownership Information report by January 1, 2025. However, a company that was created on or after January 1, 2024 and before January 1, 2025 must file a report within 90 calendar days of the date on which it was notified that its creation was effective. 

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