What Owners Need to Know
What is the BOI?
The Beneficial Ownership Information Report is a requirement set forth by the Financial Crimes Enforcement Network (FinCEN) under the Corporate Transparency Act (CTA). The BOI aims to create a centralized database of beneficial ownership information for corporations and limited liability companies (LLCs) in the United States. This information is crucial for law enforcement and regulatory agencies to track illicit activities and ensure accountability.
Who Qualifies as a Beneficial Owner?
Beneficial owners are defined as individuals who meet any of the following criteria:
- Ownership Stake: Individuals who own 25% or more of the equity stock or voting rights of the company.
- Senior Officers: Key executives such as the President, CEO, CFO, COO, or General Counsel.
- Authority to Appoint: Individuals who have the power to appoint or remove senior officers.
- Key Decision Makers: Those who direct or influence significant business decisions, including financial and structural choices.
What Do Owners Need to Do?
1. Identify Beneficial Owners
Business owners must carefully assess their ownership structure to identify all individuals who qualify as beneficial owners. This includes reviewing equity stakes, executive roles, and decision-making authority.
2. Gather Required Information
For each beneficial owner, the following information must be collected:
- Full Legal Name
- Date of Birth
- Residential Address
- Identification Details:
- ID Number
- An image of one of the following:
- U.S. passport
- State driver’s license
- State, local, or tribal identification document
3. Compile Company Information
Owners must also prepare the following details about their company:
- Full Legal Name
- Any Trade Names
- U.S. Address
- Jurisdiction Information
- Company EIN (Employer Identification Number)
4. File the Report
All entities must submit their BOI reports by January 1, 2025. Owners can file their reports through the FinCEN BOI filing portal.
5. Exempt Entities
There are 23 types of entities that are exempt from the reporting requirements. Carefully review the qualifying criteria on FinCEN’s Small Entity Compliance Guide before concluding that your company is exempt.
6. Update Information as Needed
Once the report is filed, it’s crucial to keep the information current. If any changes occur—such as a change in ownership or beneficial owners—owners must file a revised report within 30 days. Consider this a new normal for your business process and updates.