There’s a new form for companies to know about and file in 2024: the Beneficial Ownership Information (BOI) report. The BOI form came out of the passage of the Corporate Transparency Act in 2021, which aims to increase transparency when it comes to who actually owns and controls individual businesses.
According to a FAQ on the new BOI form, the new form is aimed at supporting “efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.”
Melanie Perez of Confiable CFO says this form should do a lot to curb money laundering and other illicit activities. This is because, ultimately, the BOI form requires businesses to report information regarding the people who make all the decisions and benefit the most from company profits. These people are called “beneficial owners.”
Who Is Required To File The Beneficial Ownership Information (BOI) Form?
Who exactly needs to file this form? Essentially, all corporations, LLCs and businesses that have filed formation documents with the secretary of state will need to take action. This includes single member LLCs, or individual freelancers who run their operation through a formal business structure. This also means sole proprietors who have never established a formal business structure for their company are not required to file the BOI form.
CPA Johan Garcia points out that there are some exemptions that apply to certain types of companies — 23 in total to be exact. The full list of exempt companies and industries that probably do not need to fill out the BOI form includes:
- Securities reporting issuer
- Governmental authority
- Banks
- Credit unions
- Depository institution holding company
- Money services business
- Broker or dealer in securities
- Securities exchange or clearing agency
- Other Exchange Act registered entity
- Investment company or investment adviser
- Venture capital fund adviser
- Insurance company
- State-licensed insurance producer
- Commodity Exchange Act registered entity
- Accounting firm
- Public utility
- Financial market utility
- Pooled investment vehicle
- Tax-exempt entity
- Entity assisting a tax-exempt entity
- Large operating company
- Subsidiary of certain exempt entities
- Inactive entity
Companies that were created or registered to do business before January 1, 2024, will have one year until January 1, 2025 to file the BOI report. Meanwhile, companies formed or registered in 2024 will have 90 calendar days “after receiving actual or public notice that its creation or registration is effective.”
Companies formed after January 1, 2025 will have 30 calendar days to file their initial report.
How To File The Beneficial Ownership Information (BOI) Form
Fortunately, there is a dedicated website business owners can visit to file their BOI form. This form doesn’t need to be submitted annually, either. The BOI form can be submitted just once unless the ownership information for a company changes over time. In that case, an updated BOI with correct information about beneficial owners of a company will need to be submitted.
Information requested on the BOI is about beneficial owners only, or people who exercise substantial control over a company or own or control at least 25% of the company’s interests. The term “substantial control” is one that may be difficult to gauge, and the government knows this and lists some information that may help clear it up. For example, the U.S. Department of Treasury Financial Crimes Enforcement Network says individuals exercising substantial control can be:
- Senior officers, such as the “company’s president, chief financial officer, general counsel, chief executive office, chief operating officer, or any other officer who performs a similar function”
- Individuals who have the power to appoint or remove officers or a majority of directors from decision-making roles within a company
- Important decision-makers for the reporting company
- Individuals who have any other form of substantial power or control over a company based on additional details listed in FinCEN’s Small Entity Compliance Guide
Information that needs to be submitted on each BOI form for a company includes:
- Name of beneficial owner(s)
- Birthdate of beneficial owner(s)
- Address of beneficial owner(s)
- Identifying numbers for beneficial owner(s), such as U.S. driver’s license numbers, U.S. passport numbers or numbers from other government-issued identification
Note that businesses do not have to submit the Social Security numbers (SSNs) of beneficial owners. Submitting the form is also free.
Garcia says that, even though it can be a pain to have to fill out yet another form as a business owner, you can make the process easier by understanding who beneficial owners of a company truly are. For a single member LLC filing the BOI form this year, for example, the only beneficial owner would be themselves.
If there are several beneficial owners, you should start to compile the basic information for each of them far in advance of the deadline (January 1, 2025 or 90 days if the entity is created in 2024).
“You want to avoid any possible filing penalties, though it’s likely that first-time abatements will occur,” he said.
The Bottom Line
While the new beneficial ownership information (BOI) form required in 2024 can seem like a hassle, most companies have nothing to worry about. Not only is filing this form a one-time deal unless beneficial owners change over time, but it only requires you to share basic information about the major players that have a vested interest in a company’s financials.
While the deadline for filing this form can seem like forever away if your company existed prior to 2024, your best bet is to get going on the new BOI requirement as soon as possible.
Add BOI reporting to your to-do list as soon as you can make it happen, and you can forget all about this new reporting requirement and focus on running your business instead.