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Beneficial Ownership Information Reporting Requirements

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Did you know that over 32 million small businesses across the United States must comply with new federal beneficial ownership reporting rules? Do you have lingering questions about if and how FinCEN’s latest transparency regulations may impact your business? Keep reading to find answers to these and more.

Beneficial ownership has been garnering more public attention lately due to some new federal regulations here in the United States. These rules will start impacting many business owners from January 1, 2024.

Essentially, the U.S. Treasury, through the “Corporate Transparency Act,” requires almost all businesses to start reporting who owns or controls the company. They aim to create more financial transparency and help curb crimes like money laundering and terrorism funding. Noble causes, sure. However, it could still be a major pain for small business owners!

Now, you might be wondering what counts as a “beneficial owner”? Great question! Basically, anyone with at least 25% ownership or holding substantial control over a reporting company must comply with this new directive. And, you’ll submit this reported information to the Treasury’s Financial Crimes Enforcement Network (FinCEN for short) when the time comes.

Naturally, business leaders have a lot of questions swirling about what type of specific data FinCEN is looking for, which companies have to comply with, and how firms can provide this ownership information properly without accidentally running into penalties. That’s why I want to use this post to clarify all the key details of the beneficial ownership information (BOI) reporting requirements. I’ll show you how to stay on the right side of these new rules. Let’s dig in, shall we?

What is a beneficial owner

Beneficial Ownership Information Reporting Requirements

The interest in the reporting company from the Treasury Department is aimed at clearly identifying the human beings behind companies–specifically, anyone who owns at least a 25% stake or holds major decision-making power.

So, at the minimum, businesses will need to provide personal identifying details about individuals who directly or indirectly control a significant chunk of the company’s ownership interests or those calling the shots from leadership roles able to steer company agendas. And, companies thinking they can falsify ownership data to dodge scrutiny may want to reconsider; the penalties promise to be steep!

The consequences for intentionally neglecting ownership transparency rules or providing false beneficial ownership data are no joke. We’re talking about hefty fines of up to $10,000 and potential prison time based on the offenses below:

  • Any business that deliberately fails to file its initial ownership information disclosure or does not update changes down the line will face up to $500 in daily penalties that can stack up quickly. And, any company’s beneficial owner found willfully disobeying this directive may face up to two years behind bars.
  • Separately, any individual caught sharing companies’ beneficial ownership information without authorization gets slapped with sanctions too—again, $500 per day in fines, which adds up to $250,000 max. Plus, a maximum of 5 years in prison for breaching confidentiality.
  • If a business gets caught attempting to dodge disclosure altogether, senior executives often shoulder the blame and penalties.
beneficial ownership initial report details

As a business owner, you can steer clear of penalties by double-checking that your beneficial ownership initial reports cover these key details:

Legal Business Name 

First, disclose your complete legal business name exactly as registered. Along with any alternate “DBAs” that may appear on marketing materials or contracts. Regulators want all known entity names for thorough tracking.

Business Addresses

Current addresses are mandatory–meaning either your headquarters’ physical street address if based in the U.S. Or the primary street address of your company’s main American operation center if overseas-owned. Essentially, wherever core business activities happen stateside.

Unique Identifying Number

Companies need to provide the main taxpayer I.D. number they use in filing file taxes. This would be your Employer Identification Number (EIN) if you’re a domestic business or a comparable foreign tax I.D. number and issuing country if you were formed internationally.

Registration Details 

You must clarify exactly where your company was officially created or registered—whether in the U.S., overseas, or registered to do business as a foreign entity operating stateside. Disclosing the originating jurisdictions provides deeper insight.

Photo Evidence

While not an informational field itself, businesses have to submit photo evidence of the primary I.D. documentation verifying the legal company name being provided to FinCEN. This proves everything aligns on paper.

Personal Info of Beneficial Owners

When it comes to naming the living, breathing humans deemed to be “beneficial owners,” the identifying information FinCEN wants to be reported for each individual includes the following:

  • Their full legal name, as it appears on government I.D.s.
  • Actual date of birth so financial institutions can cross-check identities.
  • A current residential street address for the family home or personal dwelling—not a P.O. box or corporate headquarters. There can be no question where they physically reside as private citizens.
  • A government-issued identification, including the I.D. number, appears on a current, valid, domestic photo document like a passport or driver’s license. If no U.S./state/tribal documents are available for foreign persons, the number of an unexpired international passport is acceptable. As with business identification, companies have to provide a digital image of the listed I.D. document to visually confirm identities and public numbers on file.

BOI Reporting Exemptions

Some companies get a pass from submitting beneficial ownership information (BOI) reports. So, you might want to take a quick look at the list below so you know if you’re also off the hook.

There will be no beneficial ownership filing required for the following entities:

  • Large operating company
  • Securities exchange or clearing agency
  • Tax-exempt entity
  • Broker or dealer in securities
  • Inactive entity
  • Venture capital fund adviser
  • Subsidiary of certain companies
  • An investment company or investment adviser
  • Entity assisting a tax-exempt entity
  • Other Exchange Act-registered entity
  • Pooled investment vehicle
  • Money services business
  • Financial market utility
  • Depository institution holding company
  • Public utility
  • Credit union
  • Accounting firm
  • Bank
  • Commodity Exchange Act-registered entity
  • Governmental authority
  • State-licensed insurance provider
  • Securities reporting issuer
  • Insurance company

However, even if your business fits into one of those excluded categories on the surface, you’ve still got to dig deeper and check with FinCEN’s small entity compliance guide before concluding you’re totally off the hook for beneficial ownership reporting.

For instance, for a large operating company to be exempted as stipulated in the above list, such a company needs over 20 full-time employees, $5 million+ in sales, and a physical U.S. office.

Beneficial Ownership Information Form

You’re probably eager to submit that beneficial ownership report to stay compliant. The official beneficial ownership information forms became available on FinCEN’s website on Jan 1, 2024 so you can file your form as soon as you are ready. They’ve set up a secure online filing portal to make submitting your reports simple and straightforward. And the best part? No fees are involved in submitting your reports! 

I’ll be keeping an eye out for any new announcements from FinCEN to pass along to you too. For now, you can just have a look around their website whenever you need a refresher. There are handy resources that can guide you when the time comes.

When do I need to register for the BOI form

While deadlines vary depending on the type of company, it’s important you know exactly what reporting timeline applies to your business:

  • If your business already existed BEFORE January 1, 2024, mark your calendars for January 1, 2025, as your deadline to have filed beneficial ownership information.
  •  For companies created or registered AFTER January 1, 2024–they’ll have 90 days to submit information about their beneficial owners once they receive notice of their successful registration.
  • And finally, companies that will be created after January 1, 2025, have the tightest turnaround—just 30 days post-registration to get reporting done.
Are you confident and ready to fulfill your BOI reporting obligation? 

This new FinCEN ownership reporting rule has so many morsels to digest; it’s enough to make your head spin with so much to do. It’s easy to feel overwhelmed and alone, wondering how you’ll get everything done right. The rules, requirements, deadlines—it’s no joke. With that being said–it’s my hope that this guide has answered all your burning questions and set you up for success! 

How to fill out the BOI form

And my help doesn’t stop there! I’ve put together templates, checklists, blog posts, and podcasts, all designed specifically for businesses like yours. Even better, they’re all bundled up nicely for you in my aptly named Ultimate Bundle™  for an all-encompassing solution hub!

So, please don’t hesitate to contact me to get solutions tailored to your business needs. Because, at the end of the day, I’ve got your back! 

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