Oh, BOI: The New Report Your LLC or Corporation Needs To File
Starting in 2024, businesses have a new requirement to stay compliant: Filing a Beneficial Ownership Information (BOI) report.
Here’s the good news: The BOI report isn’t an annual reporting requirement. If your business was created before Jan. 1, 2024, you only need to file the BOI report one time. It’s due by Jan. 1, 2025. After that, you just file updates or corrections when your business or beneficial owner information changes.
If you create a business after Jan. 1, 2024, you’ve got 30 days to file your BOI report. After that, you’re only on the hook for updates and corrections to your initial BOI report.
Let’s get into the details of what a BOI report is, who needs to file one, and details about the information you need to include.
What is a BOI report?
The Beneficial Ownership Information report is a way for the U.S. government to understand who owns and controls companies. It’s part of the Corporate Transparency Act (CTA), which Congress passed in 2021.
The intent behind BOI reporting is to make it harder for bad actors to wield influence in secret or hide behind shell companies. To that end, you document who the 25%+ business owners are, in addition to individuals who have “substantial control” over the business.
There are four types of people who have substantial control, according to the Financial Crimes Enforcement Network (FinCEN):
Senior officers. Think C-suite job titles, presidents and VPs, and general counsel.
Those with control over the board. They have power to appoint or remove officers or a majority of directors.
Important decisionmakers. Those who direct, determine, or have substantial influence over the business, finances, and structure.
Those with other kinds of substantial control. FinCEN details who they’re talking about in the Small Entity Compliance Guide.
Beginning Jan. 1, 2024, you can file the BOI report online from the Beneficial Ownership Information page of the FinCEN website.
Who needs to file a BOI report?
There are two types of companies that might need to file a BOI report: domestic companies and foreign companies.
A domestic company might be required to file a BOI report if it’s:
A corporation,
A limited liability company (LLC), or
Created by filing a document with a secretary of state or any similar office under the law of a state or Indian tribe.
That means many small business owners who run S Corporations, C Corporations, and LLCs will be responsible for filing a BOI report.
A foreign company might be required to file a BOI report if it has registered to do business in a U.S. state or tribal jurisdiction.
Meeting the above qualifications means you’re likely considered a domestic reporting company or foreign reporting company — a business required to file a BOI report.
But there are exceptions! Even if you’re a corporation, LLC, another entity created by filing with a secretary of state (or equivalent), or a foreign company registered to conduct business in a U.S. state or tribal jurisdiction, you might be one of the 23 types of entities that are exempt from filing.
Certum Solutions has the Answers
Certum is here to help you through matters like filing a BOI report, complying with various federal and state mandates, and much more. We are experts in bookkeeping, e-commerce, managed services, and also work in many industries, including construction, manufacturing and nonprofit.
Contact us today to set up a free consultation.
If you need further clarification, FinCEN’s Small Entity Compliance Guide might help you determine whether you’re required to file.
What to include in your BOI report
Another piece of good news: The information required for your BOI report is pretty darn simple. Broadly, there are three things you might need to document.
1. Your business’s information
For your company, you document:
· Its legal name.
· Any trade names, doing business as (d/b/a) names, or trading as (t/a) names.
· The current street address of its principal place of business, i.e., its headquarters. If you run a foreign company, list the current address from which your foreign company conducts business in the U.S., i.e., its U.S.-based HQ.
· The jurisdiction where it was formed or registered.
· Its Taxpayer Identification Number (TIN).
2. Your beneficial owners’ information
A beneficial owner might own or control at least 25% of the reporting company’s ownership interests. Or, a beneficial owner might exercise substantial control, like we discussed above.
For each individual who qualifies as a beneficial owner, you report their:
· Name.
· Date of birth.
· Residential address.
· Passport number, U.S. driver’s license number, or an identifying number from another acceptable ID. Include the name of the issuing state or jurisdiction, and include a photo of the ID.
3. Your company applicants
Only businesses created after Jan. 1, 2024, need to report their company applicants. In short, a company applicant is a person filing — or directing and controlling — your business registration with the secretary of state. That means if you’re working with an attorney or agent to help you with the filing process, you need to report their involvement.
For company applicants, you list their:
· Name.
· Date of birth.
· Address, or business address for an attorney or corporate formation agent.
· Passport number, U.S. driver’s license number, or an identifying number from another acceptable ID. Include the name of the issuing state or jurisdiction, and include a photo of the ID.
Happy new year, happy BOI filing!
The best way to stay on the right side of the law is to file early. Set a reminder for January to visit the Financial Crimes Enforcement Network website to file your Beneficial Ownership Information. It’s a small step for entrepreneurs to help enhance transparency in the business world.
If you still have questions about navigating the CTA and BOI reporting, contact us today; we’re here to help.
Until the filing period begins, have a joyous holiday season. Happy new year from the Certum Solutions team!