What is a BOI Report? Understanding beneficial ownership information reporting

Many small businesses must file a new report with the federal government by Jan. 1, 2025. The Beneficial Ownership Information Report (BOIR, also known as BOI Report) provides details about the people who own and control businesses that operate in the U.S. It’s part of a broader effort to combat money laundering and other criminal activity that threaten fair business practices.

Business entities such as LLCs and corporations must file a BOI Report unless they fall within one of several exemptions, which are explained below. Here’s what you need to know.

What is a BOI Report? Understanding beneficial ownership information reporting

The Beneficial Ownership Information (BOI) Report is a new requirement under the federal Corporate Transparency Act (CTA). A BOI Report lists a company’s “beneficial owners”—the individuals who actually own or control the business. Businesses formed on or after Jan. 1, 2024, must also provide information about “company applicants,” the people who filed business entity formation paperwork.

The beneficial ownership report is filed online with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). Beneficial owner information is stored in a secure database, where it may be used by law enforcement officials, certain government agencies, and financial institutions subject to due diligence requirements. The information will not be available to the general public.

Exploring BOI reporting requirements: compliance and regulations

The Corporate Transparency Act is the result of a bipartisan effort to crack down on criminals who form anonymous American shell companies and use them to disguise their identities as they engage in illicit activities like money laundering, drug trafficking, and human trafficking. These illegal enterprises pose threats to legitimate businesses, the U.S. economy, and national security.

The beneficial ownership information reporting rule requires all non-exempt businesses—including legitimate small businesses—to file a report providing information about the people who own and control the company. These reports introduce a new level of transparency that should make it harder for bad actors to hide behind American business structures. And there are steep penalties for non-compliance or failing to file accurately.

Who needs to file a BOI Report? Understanding reporting obligations

Under the Corporate Transparency Act (CTA), “reporting companies” must file a beneficial ownership report unless they are exempt.

• A domestic reporting company is a business entity such as an LLC, corporation, or S corporation created in a U.S. state.
• A foreign reporting company is a foreign business that has registered with a U.S. state or Native American tribe.
• Sole proprietorships and general partnerships aren’t reporting companies and don’t have to file a BOI Report.

The CTA has a long list of business types that are exempt from filing, but many small businesses will not fall within any of the exemptions. A U.S. business may qualify for an exemption for large operating companies if it has more than 20 U.S. employees and more than $5 million in U.S. gross receipts or sales, as reported on the previous year's tax return. Inactive businesses may also be exempt from BOI filing.

The remainder of the reporting company exemptions apply to nonprofits, publicly traded companies, companies registered under the Commodities Exchange Act, and companies that operate in specific regulated industries such as banking, insurance, and public utilities. A complete list is available on the FinCEN website. 

How to file a BOI for an LLC

To prepare an LLC BOI Report, start by identifying the “beneficial owners” of your company. These are individuals who:

• Own at least 25 percent of the limited liability company.
• Exercise “substantial control” over the business. Examples include a senior officer of the company, anyone with authority to appoint and remove senior officers or members of the governing board, an important decision maker, or someone who exercises substantial control in some other way.

 Your LLC BOI should include the following information for each beneficial owner:

• Full legal name
• Current street address
• A copy of a government-issued ID document such as a driver’s license, U.S. passport, or other ID document issued by a U.S. state or Native American tribe, with the driver’s license number or other identifying number clearly visible. Beneficial owners who don’t have any of these documents can submit a foreign passport.

 You’ll also provide information about your company in your BOIR Report:

• Its legal name and any DBAs
• The address of its principal place of business or primary U.S. location
• The state or foreign jurisdiction where the LLC was created
• For foreign LLCs, the state or tribal jurisdiction where the LLC first registered to do business
• The LLC’s tax ID number

Limited liability companies created in 2024 or later must also list information about “company applicants,” discussed below.

Once you’ve gathered your beneficial ownership information, you can complete your free BOIR filing on the FinCEN website, either by filling out the form directly on the website or by completing a PDF form offline and then uploading it. You’ll receive an email confirmation when your BOI for an LLC has been accepted.

You can also have an outside company, such as LegalZoom, assist you with filing accurately to avoid civil and criminal penalties. When you use LegalZoom to submit your BOI Report, you can:

• Avoid serious penalties
• Enjoy peace of mind
• File with confidence

Additional BOI reporting obligations for businesses created in 2024

U.S. reporting companies created on or after Jan. 1, 2024, and foreign reporting companies that first registered with a state or Native American tribe on or after Jan. 1, 2024, must also include identification information for company applicants. These are the people responsible for filing paperwork with the state to establish or register the business.

There are two categories of company applicants, and your company may have only one or both.

• All reporting companies will list a direct filer. This is the person who physically or electronically filed the formation or registration paperwork.
• If someone other than the direct filer directed or controlled the filing, you’ll also provide information about that person. An example would be a lawyer who prepared the paperwork and gave it to an assistant to file.

You’ll provide the same information about company applicants as you provided for beneficial owners.

FAQs about BOI reporting

When is the deadline for filing a BOI Report?

Reporting companies created before 2024 have until Jan. 1, 2025, to complete their initial BOI Report. Companies formed in 2024 must report beneficial ownership information within 90 days after receiving actual or public notice that the business was formed. The BOI deadline for reporting companies created in 2025 or later is 30 days after receiving notice of the business’ formation.

What are the consequences of non-compliance with BOI reporting requirements?

The Corporate Transparency Act provides for fines of up to $500 per day for each day you don’t comply. In addition, anyone who willfully violates the BOI reporting obligations can face criminal penalties, including up to $10,000 in fines and/or two years of imprisonment.

Where can I find the BOI reporting forms and instructions?

The BOI form for 2024, along with detailed instructions, is available on the FinCEN website. LegalZoom can help your business file the report and stay in compliance.

Are there any updates or changes to BOI reporting requirements for 2024?

The BOI Report is a new requirement in 2024, and FinCEN continues to update its website with additional guidance. In addition, several states are considering or have enacted their own beneficial ownership reporting requirements. New York passed legislation in March requiring LLCs formed or registered in New York to file a beneficial ownership disclosure or attestation of exemption with the state. Check with the New York Department of State for deadlines and exemptions for NY businesses.

Understanding BOI compliance: ensuring accuracy and timeliness

To meet the goals of BOI reporting and avoid civil and criminal penalties, it’s important to file beneficial ownership information (BOI) on time, accurately, and keep it up to date.

Although a Beneficial Ownership Information Report doesn’t expire, it must be updated if any of the information in it changes. LegalZoom can help you with ongoing BOI report update filings. You must report information changes to FinCEN within 30 days of the change. Similarly, if you find an inaccuracy in a report you’ve filed, you have 30 days to submit a corrected BOI form.