FinCEN Beneficial Ownership Reporting (BOI)

Corporate Transparency Act Overview

The Corporate Transparency Act (CTA), effective January 1, 2024, represents the most significant change to U.S. corporate transparency requirements in decades. The law requires most U.S. corporations and LLCs to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).

The CTA aims to combat money laundering, terrorist financing, tax fraud, and other illicit activities by creating a comprehensive federal database of beneficial ownership information. This database helps law enforcement, national security agencies, and financial institutions identify the individuals who ultimately own or control U.S. companies.

⚠ Mandatory Compliance - Severe Penalties

Willful failure to file a BOI report or filing false information can result in:

Civil penalties: Up to $500 per day the violation continues
Criminal penalties: Fines up to $10,000 and/or imprisonment up to 2 years

Who Must File BOI Reports

The CTA applies to reporting companies, divided into two categories:

Domestic Reporting Companies

U.S. entities created by filing a document with a secretary of state or similar office, including:

Corporations (C-corps, S-corps)
Limited Liability Companies (LLCs) (single-member, multi-member)
Limited Partnerships (LPs)
Limited Liability Partnerships (LLPs)
Business trusts created by filing
Any similar entity created by state filing

Foreign Reporting Companies

Foreign entities registered to do business in any U.S. state or tribal jurisdiction, including:

Foreign corporations registered with a secretary of state
Foreign LLCs authorized to conduct business in the U.S.
Any foreign entity that filed registration documents to do business in the U.S.

Do You Need to File a BOI Report?

Step 1: Is your company a corporation, LLC, or similar entity created by filing with a state/tribal office?
→ If NO: You likely don't need to file
→ If YES: Continue to Step 2

Step 2: Does your company qualify for any of the 23 exemptions (see Exemptions section below)?
→ If YES: You don't need to file
→ If NO: Continue to Step 3

Step 3: When was your company created or registered?
→ Before Jan 1, 2024: Deadline was Jan 1, 2025 (file immediately if missed)
→ Jan 1 - Dec 31, 2024: 90 days from formation/registration
→ On or after Jan 1, 2025: 30 days from formation/registration

💡 Sole Proprietorships and General Partnerships

Entities that were NOT created by filing with a state office (like sole proprietorships and general partnerships) are generally NOT reporting companies and do NOT need to file BOI reports.

Beneficial Owner Definition

A beneficial owner is any individual who, directly or indirectly, either:

Exercises substantial control over the reporting company, OR
Owns or controls at least 25% of the ownership interests of the reporting company

25% Ownership Test

An individual meets the ownership test if they own or control at least 25% of the ownership interests through:

Direct ownership: Holding shares, membership interests, capital/profit interests
Indirect ownership: Ownership through intermediary entities, trusts, or other arrangements
Options and convertible instruments: Rights to acquire ownership that could result in 25%+ ownership
Aggregated ownership: Multiple small interests that together total 25%+

⚠ Count All Forms of Ownership

You must aggregate direct ownership, indirect ownership through other entities, and potential future ownership through options/convertible securities. This can result in more than 4 beneficial owners (the 25% threshold doesn't limit the number of beneficial owners).

Substantial Control Test

An individual exercises substantial control if they meet ANY of the following criteria:

Substantial Control Indicators:

Senior Officer: Serves as President, CEO, CFO, COO, General Counsel, or equivalent position

Appointment Authority: Has authority to appoint or remove senior officers or a majority of the board of directors

Important Decisions: Directs, determines, or has substantial influence over important company decisions

Other Control: Exercises any other form of substantial control over the company

Important decisions include those regarding:

The nature, scope, and attributes of the business
Major expenditures or investments
Issuance of equity, incurrence of significant debt, or approval of operating budgets
Compensation schemes and incentive plans for senior officers
Entry into or termination of significant contracts
Amendments to governance documents (articles, bylaws, operating agreements)
Merger, dissolution, or bankruptcy proceedings
Selection of business locations or expansion into new markets

💡 Multiple Beneficial Owners Are Common

Most companies will have multiple beneficial owners. All individuals meeting EITHER the ownership test OR the substantial control test must be reported. A typical small company might report 2-6 beneficial owners.

Company Applicant Requirements

For companies created or registered on or after January 1, 2024, you must also report company applicants in your initial BOI report.

Who Are Company Applicants?

Company applicants are the individuals who were responsible for the company's formation or registration (maximum of 2 individuals):

Direct Filer: The individual who directly filed the formation or registration document with the secretary of state or similar office
Person Primarily Responsible: If different from the direct filer, the individual primarily responsible for directing or controlling the filing

✓ Company Applicant Exemption for Existing Entities

Companies formed BEFORE January 1, 2024, do NOT need to report company applicants - only beneficial owners. This significantly reduces the reporting burden for existing entities.

Required Information

Information About the Reporting Company

Company Information Checklist:

Full Legal Name as shown on formation/registration documents

All Trade Names, DBAs, or "Doing Business As" Names

Current Street Address of principal place of business (U.S. address; if no U.S. address, provide address where primary business operations are conducted)

State, Tribal, or Foreign Jurisdiction of Formation (where initially created or registered)

IRS Taxpayer Identification Number (TIN) - typically the Employer Identification Number (EIN)

Information About Each Beneficial Owner and Company Applicant

Individual Information Checklist:

Full Legal Name (first, middle, last)

Date of Birth

Complete Residential Street Address (for beneficial owners) or Business Street Address (acceptable for company applicants)

Unique Identifying Number from an acceptable identification document:

U.S. Passport
State Driver's License
State or Local Government-Issued ID
Foreign Passport (if no U.S. document available)

Image of Identification Document (clear, readable PDF or image file showing photo side)

💡 P.O. Boxes Not Acceptable

All addresses must be street addresses. P.O. boxes cannot be used. For beneficial owners, you must provide their current residential address (home address), not a business address.

Filing Deadlines

Company Formation/Registration Date	Initial Report Deadline
Created or registered before January 1, 2024	January 1, 2025 If you missed this deadline, file immediately
Created or registered January 1 - December 31, 2024	90 calendar days after receiving notice of formation/registration
Created or registered on or after January 1, 2025	30 calendar days after receiving notice of formation/registration

Updated Reports

If ANY information in a previously filed BOI report changes, you must file an updated report within 30 calendar days of when the change occurred.

Changes requiring an updated report include:

Change in beneficial ownership (new beneficial owner, existing beneficial owner no longer qualifies)
Change in beneficial owner information (name change, new address, new identification document)
Change in company information (name change, address change, new DBA)

Corrected Reports

If you discover that information in a previously filed report was inaccurate when filed, you must file a corrected report within 30 calendar days of when you became aware of the inaccuracy or had reason to know about it.

⚠ No Extensions Available

FinCEN does not grant extensions for BOI report deadlines. The 30-day deadline for updated and corrected reports is strict. Set up systems to track changes in beneficial ownership and company information.

Exemptions from BOI Reporting

The CTA provides 23 categories of exemptions. Companies qualifying for an exemption do NOT need to file BOI reports. FinCEN does not require you to file anything to claim an exemption - simply don't file if you qualify.

Key Exemptions (Most Commonly Applicable)

Exemption Category	Requirements
Large Operating Company	ALL three criteria must be met: Employs more than 20 full-time employees in the U.S. Has more than $5,000,000 in gross receipts or sales (U.S.-sourced, on the previous year's federal tax return, excluding receipts from sources outside the U.S.) Has an operating presence at a physical office in the U.S.
Securities Reporting Issuer	Company required to file reports with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934 (publicly traded companies and certain large companies)
SEC-Registered Entities	Investment companies registered under the Investment Company Act of 1940 Investment advisers registered with the SEC
Broker-Dealers	Registered broker or dealer in securities under the Securities Exchange Act of 1934
Registered Money Services Businesses	Entities registered with FinCEN as a money services business (MSB)
Banks and Credit Unions	Banks, credit unions, and bank holding companies subject to federal banking regulation
Insurance Companies	Insurance companies regulated by a state insurance commissioner or similar official
Tax-Exempt Entities	501(c) tax-exempt organizations Political organizations under Section 527 Trusts described in Section 4947(a)(1)
Inactive Entity	ALL six criteria must be met: Existed on or before January 1, 2020 Not engaged in active business Not owned by a foreign person (directly or indirectly) No change in ownership in the preceding 12 months Has not sent or received more than $1,000 in the preceding 12 months Does not hold any assets (including ownership interest in other entities)
Subsidiary of Certain Exempt Entities	Entity whose ownership interests are controlled or wholly owned by one or more exempt entities (such as a subsidiary of a public company or bank)

⚠ Large Operating Company Exemption - All Three Tests Required

The most commonly applicable exemption is the Large Operating Company exemption, but ALL THREE requirements must be met simultaneously:

20+ full-time U.S. employees (at least 30 hours/week or 130 hours/month)
$5M+ gross receipts/sales reported on the previous year's federal tax return (U.S.-sourced)
Physical U.S. office where the company operates (not just a registered agent address)

Failing even one test means you must file a BOI report.

Additional Exemptions

Other exemption categories include:

Governmental authorities
Public utilities
Entities assisting tax-exempt entities
Pooled investment vehicles
Accounting firms registered with the PCAOB
Venture capital fund advisers

FinCEN Identifier Application Process

A FinCEN Identifier is a unique identifying number issued by FinCEN that individuals and reporting companies can obtain to streamline BOI reporting.

Benefits of Obtaining a FinCEN Identifier

Privacy Protection: Instead of repeatedly submitting personal information (address, date of birth, ID document image), provide only your FinCEN Identifier
Efficiency: If you're a beneficial owner of multiple entities, you only need to submit your information once
Centralized Updates: When your information changes (new address, renewed ID), update it once with FinCEN instead of filing updated BOI reports for every company
Reduced Filing Burden: Companies can file BOI reports more quickly by collecting FinCEN Identifiers from beneficial owners

How to Obtain a FinCEN Identifier

Access the BOI E-Filing System: Visit https://boiefiling.fincen.gov
Select "Request a FinCEN Identifier" (available for both individuals and reporting companies)
Submit Required Information: Provide the same information required in a BOI report (name, date of birth, address, ID document)
Receive Your FinCEN ID: FinCEN will issue a unique identifying number
Provide FinCEN ID to Reporting Companies: Give your FinCEN Identifier to any company required to report you as a beneficial owner
Update Centrally: If your information changes, submit an updated FinCEN Identifier application within 30 days

✓ Recommended for Serial Entrepreneurs & Multi-Entity Owners

If you are or will be a beneficial owner of multiple reporting companies, obtaining a FinCEN Identifier can save significant time and protect your personal information. You submit sensitive documents once rather than repeatedly for each company.

BOI Filing Procedures

All BOI reports must be filed electronically through FinCEN's BOI E-Filing System at https://boiefiling.fincen.gov. There is no filing fee.

Step-by-Step Filing Process

BOI Filing Checklist:

Step 1: Identify Beneficial Owners - Determine all individuals who own 25%+ OR exercise substantial control

Step 2: Identify Company Applicants - If formed on/after Jan 1, 2024, identify the direct filer and person primarily responsible

Step 3: Gather Company Information - Collect company name, DBAs, address, jurisdiction, EIN

Step 4: Collect Individual Information - Obtain name, DOB, address, and ID documents for all beneficial owners and company applicants (or obtain their FinCEN Identifiers)

Step 5: Prepare ID Document Images - Scan or photograph acceptable ID documents (passport, driver's license, state ID) in PDF or image format

Step 6: Access BOI E-Filing System - Visit https://boiefiling.fincen.gov

Step 7: Complete Online Form - Enter all required information for the company and individuals

Step 8: Upload ID Documents - Attach ID document images (unless using FinCEN Identifiers)

Step 9: Review Carefully - Double-check all information for accuracy before submitting

Step 10: Submit Report - File electronically and save the FinCEN submission confirmation

💡 No Filing Fee - Beware of Third-Party Scams

FinCEN does NOT charge a fee to file BOI reports. Beware of third-party websites and services claiming you must pay to file. While third-party providers may legitimately assist with filing, the official FinCEN portal is free to use.

Update Requirements

BOI reporting is NOT a one-time filing. You must file updated or corrected reports within 30 calendar days whenever information changes or inaccuracies are discovered.

When to File Updated Reports

Type of Change	Examples
Change in Beneficial Ownership	New individual acquires 25%+ ownership Existing owner's stake crosses 25% threshold New individual assumes substantial control role Existing beneficial owner dies, retires, or no longer qualifies
Change in Beneficial Owner Information	Legal name change (marriage, court order) Residential address change New or renewed identification document
Change in Company Information	Company name change Principal place of business address change New DBA or trade name Change in jurisdiction (domestication, conversion)

⚠ 30-Day Deadline Applies to All Changes

Every change triggering an update must be reported within 30 calendar days of when it occurs. This deadline is strict - there are no extensions. Consider designating a compliance officer to monitor beneficial ownership and company information changes.

Penalties for Non-Compliance

The CTA imposes severe penalties for willful violations of BOI reporting requirements. Both individuals and companies can face liability.

Civil Penalties

Up to $500 for each day the violation continues
Penalties accrue daily until the violation is corrected
Example: A 6-month delay in filing could result in penalties exceeding $90,000

Criminal Penalties

Fines up to $10,000
Imprisonment for up to 2 years
Both fine and imprisonment may be imposed

Who Can Be Held Liable?

The reporting company itself
Senior officers responsible for ensuring BOI filing compliance
Any individual who causes the company's failure to comply
Individuals who willfully provide false information or fail to update changed information

⚠ Personal Liability for Officers and Directors

Senior officers can be held personally liable for a company's failure to file BOI reports, even if they are not beneficial owners themselves. Ensure your company has systems to identify beneficial owners and track filing deadlines.

What Constitutes a Violation?

Willfully failing to file an initial, updated, or corrected BOI report
Willfully filing false or fraudulent beneficial ownership information
Willfully failing to correct inaccurate information after becoming aware of it
Willfully failing to update information after a change occurs
Unauthorized disclosure or use of BOI information by government or financial institution personnel

Safe Harbor for Voluntary Corrections

FinCEN has indicated it will consider the following factors when determining whether to impose penalties:

Whether the violation was willful or the result of reasonable cause
Whether the reporting company or individual voluntarily corrected the error
The company's compliance history
The severity and impact of the violation

✓ File Immediately if You've Missed a Deadline

If you discover you've missed a BOI filing deadline, file as soon as possible. FinCEN is more likely to show leniency for good-faith efforts to comply, especially in the early years of CTA implementation.

Exemption Analysis Guide

Determining whether your company qualifies for an exemption requires careful analysis. Below is a detailed breakdown of the most commonly applicable exemptions.

Large Operating Company Exemption - Detailed Analysis

This is the most important exemption for established businesses. ALL THREE criteria must be met:

Large Operating Company Exemption Test

Test 1: Employee Count
Does your company employ more than 20 full-time employees in the United States?

Full-time means:

At least 30 hours per week, OR
At least 130 hours per month

Employee location: Must work in the U.S. (doesn't matter if foreign nationals)
Counting: Use headcount on the date of assessment; don't include contractors

Test 2: Gross Receipts/Sales
Did your company report more than $5,000,000 in gross receipts or sales on its most recently filed federal income tax return?

Key points:

Use gross receipts from your previous year's federal tax return
Consolidated returns: Use the company's own receipts, not consolidated group receipts
U.S.-sourced: Exclude receipts from sources outside the United States
New companies: If no prior tax return, this test cannot be met

Test 3: Physical U.S. Office
Does your company have an operating presence at a physical office within the United States?

Requirements:

Physical office in the U.S. where the company conducts business
NOT just a registered agent address or mail drop
Office must be owned or leased by the company
Employees must physically work from this office

⚠ All Three Tests Must Be Met Simultaneously

Even if you have 100 employees and $50M in revenue, if you don't have a physical U.S. office (e.g., fully remote workforce), you do NOT qualify for the exemption and must file BOI reports.

Subsidiary of Exempt Entity

If your company's ownership interests are controlled or wholly owned by one or more entities that are themselves exempt, your company may qualify for the subsidiary exemption.

Example scenarios:

Wholly-owned subsidiary of a publicly traded company
Entity 100% owned by a bank or credit union
Subsidiary of an SEC-registered investment adviser

Requirements:

Parent company must qualify for one of the 23 exemptions
Parent company must "control" or "wholly own" the subsidiary (FinCEN has indicated control means effective control over the subsidiary)

Implementation Checklist & Next Steps

Complete BOI Compliance Checklist:

Determine Reporting Status: Assess whether your company is a reporting company or qualifies for an exemption

Identify All Beneficial Owners: Review ownership structure and identify all individuals meeting the 25% ownership OR substantial control test

Identify Company Applicants: If formed on/after January 1, 2024, identify the direct filer and person primarily responsible for formation

Gather Information and Documents: Collect required information and ID documents for all individuals (or have them obtain FinCEN Identifiers)

File Initial BOI Report: Submit report through FinCEN's BOI E-Filing System before the applicable deadline

Establish Ongoing Compliance Procedures: Implement systems to monitor changes in beneficial ownership and company information

Designate Compliance Officer: Assign responsibility for monitoring BOI compliance and filing updated/corrected reports

Calendar Update Deadlines: Set up alerts for the 30-day deadline whenever changes occur

Document Exemption Analysis: If claiming an exemption, document your analysis in case of future FinCEN inquiry

Consult Legal Counsel: For complex ownership structures, multi-tiered entities, or exemption questions, seek legal guidance

Recommended Next Steps

Immediate Action (If Not Yet Filed): If your filing deadline has passed or is approaching, prioritize filing immediately to minimize penalties
Review Ownership Structure: Conduct a comprehensive review to identify all direct and indirect beneficial owners
Consider FinCEN Identifiers: If beneficial owners have interests in multiple entities, have them obtain FinCEN Identifiers
Implement Change Monitoring: Establish procedures to identify triggering events requiring updated BOI reports within 30 days
Annual Review: Even if no changes occurred, conduct an annual review to confirm beneficial ownership information remains accurate
Train Key Personnel: Ensure officers, directors, and administrative staff understand BOI requirements and reporting deadlines
Seek Legal Counsel: For questions about complex structures, indirect ownership, or exemption eligibility, consult experienced counsel

Legal Disclaimer: This guide provides general information about FinCEN beneficial ownership information reporting requirements under the Corporate Transparency Act. BOI requirements depend on your specific ownership structure, exemption eligibility, and timing of formation. This information does not constitute legal advice. Consult with qualified legal counsel for guidance specific to your circumstances before making filing decisions.