If you’re a business owner learning about Beneficial Ownership Information Reporting (BOIR) for the first time, you might wonder, “Is this necessary for me?”. The answer is probably, yes. Over 30 million businesses in the U.S. need to comply with the Corporate Transparency Act (CTA) and submit a Beneficial Ownership Information Report to FinCEN.
This guide explains which businesses are categorized as “reporting companies” and are required to file BOI Reports with FinCEN.
What Are Reporting Companies for BOIR?
The Financial Crimes Enforcement Network (FinCEN) is in charge of running Beneficial Ownership Information Reporting and enforcing the requirements. FinCEN defines a “reporting company” as any entity created by filing documents with a Secretary of State’s office in the U.S.
Here’s a list of entities that qualify as reporting companies for BOIR:
- Limited liability companies (LLCs)
- Corporations
- Foreign companies registered in the U.S.
- Limited partnerships (LPs)
- Series LLCs
- Business trusts
Let’s dive deeper into reporting companies for Beneficial Ownership Information Reporting:
Limited Liability Companies (LLCs)
Virtually all limited liability companies (LLCs) formed in the U.S. must report their beneficial ownership information to FinCEN. LLCs are the most common entity choice for small businesses.
LLCs need to report any Members who own 25% or more of the company, any Managers authorized to act on the company’s behalf, and anyone with substantial control over the business.
Corporations
Corporations formed or registered to do business in the U.S. must comply with the CTA by filing BOI Reports.
Corporations need to report major shareholders who own 25% or more of the total company stock. Additionally, corporations must report all senior officers and directors who exercise substantial control over the business.
Foreign Companies
Foreign companies that are formed in other countries count as reporting companies if they are registered to do business in the U.S. This includes any U.S.-based subsidiaries owned by a foreign company.
Limited Partnerships (LPs)
A limited partnership qualifies as a reporting company, especially if it must file formation documents with a Secretary of State’s Office.
Series LLCs
Series LLCs are reporting companies and need to comply with BOIR. FinCEN has not made it clear whether Series LLCs need to complete separate BOI Reports for each protected series created by the company.
To be safe, Series LLCs should report all of the beneficial owners involved in the business. This includes the beneficial owners of the parent LLC and each protected series.
Business Trusts
Any business trust formed by filing a formation document with the state is a reporting company.
Business trusts differ from estate planning trusts, which are usually created by filing a document with the court, not with a state government.
Which Businesses Are Not Reporting Companies?
Some types of business are not considered to be reporting companies by FinCEN and do not need to file BOI Reports. These include businesses set up as sole proprietorships or general partnerships.
Typically, sole proprietorships and general partnerships do not need to file any formation documents with the Secretary of State’s office to do business.
What Are BOI Reports and BOIR?
Beneficial Ownership Information Reports, or “BOIR”, are a federal legal requirement that U.S. businesses need to complete to avoid penalties. The Corporate Transparency Act (CTA) requires companies to submit BOI Reports to the Financial Crimes Enforcement Network (FinCEN) before specific deadlines.
BOI Reports contain information about a company and all of its “beneficial owners”. Beneficial owners include anyone who owns at least 25% of the company, or has “substantial control” over the business. New companies being formed starting in 2024 also need to report information about their company applicants.
The deadlines for BOI Reports depend on the date when the company was formed. New companies formed on or after January 1, 2024 have 90 days after the company’s formation date to file a BOI Report. Existing companies formed before January 1, 2024 need to file BOI Reports by December 31, 2024. New companies being formed starting in 2025 will only have 30 days to file BOIR.
Which Companies Are Exempt From Reporting?
Some businesses are exempt from having to file Beneficial Ownership Information Reports. FinCEN provides 23 exemption categories in their reporting rules for BOIR. A company needs to meet all the criteria for one of these categories to be exempt.
Exemptions typically apply to large companies in regulated industries. Large operating companies can receive an exemption from BOIR if they have more than 20 U.S. employees, are physically located in the U.S. and report over $5 million on their tax returns.
What Information Do You Need For BOIR?
Beneficial Ownership Information Reports (BOIR) require specific details about a company, its beneficial owners, and the company applicants.
For the each beneficial owner and company applicant, you need to report:
- Their full name,
- Date of birth,
- Current residential address,
- The unique ID number from a valid identification document, and
- A photo of a valid identification document.
Valid ID documents for BOI Reports include non-expired U.S. driver’s licenses, non-expired U.S. and foreign passports, and non-expired U.S. state, local or tribe-issued IDs.
For the reporting company, you need to report:
- The company’s full legal name,
- Jurisdiction of formation (where the company was formed),
- A principal business address in the U.S., and
- The company’s U.S. federal tax ID number (EIN).