What is an example of a beneficial owner with substantial control?

Examples of beneficial ownership and beneficial owners with substantial control include:An important decision-maker for the reporting company A senior officer (president, chief executive officer, chief financial officer, general counsel, chief operating officer, or any other officer with a similar function) An individual with the authority to appoint or remove officers or directors (or similar body) of the company

What is the point of beneficial ownership?

Effective Jan. 1, 2024, beneficial ownership information reporting is a legal requirement under the Corporate Transparency Act and supports the ongoing focus and efforts of the U.S. government to deter those who would otherwise hide or benefit from actions that harm others.

What information is required for beneficial ownership?

A beneficial owner is required to provide their legal name, date of birth, address, percentage of ownership, and an image of an acceptable identification document, such as a passport or driver's license, along with the issuing jurisdiction and the document's ID number.

What types of companies do not qualify as reporting companies and may be exempt from Beneficial Ownership Information Reporting?

The Financial Crimes Enforcement Network lists 23 types of exempt business entities that do not qualify as reporting companies under the reporting requirement.Securities reporting issuerGovernmental authority Bank Credit union Depository institution holding company Money services business Broker or dealer in securities Securities exchange or clearing agency Other Exchange Act registered entity Investment company or investment adviser Venture capital fund adviser Insurance company State-licensed insurance producer Commodity Exchange Act registered entity Accounting firm Public utility Financial market utility Pooled investment vehicle Tax-exempt entities Entity assisting a tax-exempt entity Large operating company Subsidiary of certain exempt entities Inactive entity

What companies qualify as tax-exempt and may be exempt from Beneficial Ownership Information Reporting?

Companies qualify as tax-exempt entities if they meet any of the following criteria:The IRS considers them exempt entities under section 501(c) of the Internal Revenue Code (this will include many entities with nonprofit organization status). They lost tax-exempt status under the code less than 180 days prior. They are political organizations as defined under section 527(a) of the code. They are trusts as defined under section 4947(a) of the code.

What companies qualify as a large operating company and may be exempt from Beneficial Ownership Information Reporting?

The agency defines a large operating company as meeting all of the following criteria:It is otherwise subject to a federal regulatory regime. It has over 20 people with full-time employment status in the U.S. It has more than $5 million in gross receipts or sales on a prior year's tax return filed with the IRS, excluding foreign receipts. It has a physical operating presence in the U.S. It is owned by an entity already exempt under the Corporate Transparency Act. It is otherwise designated as exempt by the Secretary of the Treasury and the U.S. Attorney General.

What types of companies qualify as inactive entities and may be exempt from Beneficial Ownership Information Reporting?

A reporting company must be an active business, and inactive entities are not required to report. The Financial Crimes Enforcement Network defines an inactive entity as meeting all of the following criteria:It was created before Jan. 1, 2020. It is not engaged in active business. It is not owned by a foreign person, resident, domestic partnership, corporation, or other estate or trust. It has not sent or received over $1,000 while transacting business in the last year. It has no assets, including ownership of other companies, in the U.S. or elsewhere.

What types of individuals are exempt from being listed as a beneficial owner according to the Corporate Transparency Act?

The Corporate Transparency Act exempts certain people from the beneficial owner definition, including:Minors Individuals acting as nominees, intermediaries, custodians, or agents on behalf of someone else Employees who are not senior officers and whose only interest or control is derived solely from their employment status Individuals whose only interest in a reporting company is derived solely from the right of inheritance Contingent trust beneficiaries Creditors whose only interest is to recover business debts

What is the Corporate Transparency Act?

The Corporate Transparency Act is legislation that changes the reporting requirements for beneficial ownership information of business owners operating in the United States. It requires businesses to identify and document any person who holds a 25% or greater ownership interest or exercises substantial control over the company.Under the Corporate Transparency Act, most reporting companies must file information on each beneficial owner with the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN). FinCEN has developed a database that holds information about each beneficial owner documented by a reporting company.

What are the changes for LLCs in 2024?

Members, or owners, of a limited liability company (LLC) are likely designated beneficial owners under the beneficial owner definition of the rule and need to file the new report with the federal agency and provide basic contact information about the company and its owners.This requirement applies to single-member and multi-member LLCs, all of whom could be considered beneficial owners, and therefore would need to be identified in the Beneficial Ownership Information Report and filing, along with their identifying information.

What if there are changes to my business after filing a Beneficial Ownership Information Report?

Changes to the owners or controlling members of a business, or their identifying information, require updated beneficial ownership information reporting. For example, an updated Beneficial Ownership Information Report is required when a controlling member is a minor and reaches an age of majority or if a company becomes tax exempt. Additionally, an updated Beneficial Ownership Information Report is also required if initially reported information is incorrect or if entities amend their formation documents. Businesses have 30 days from the date of the change or amendment to file an updated Beneficial Ownership Information Report.

What is LegalZoom's Compliance Filings package?

Keeping your business compliant is critical to maintaining your good standing status and avoiding penalties, fines, and imprisonment. With Compliance Filings, you’ll satisfy the new beneficial ownership information reporting requirement and additional compliance filing requirements:Annual reports: Guided setup and completion of official filings that keep your business' information—including its name, address, managers, and other details—updated with the state. Filing requirements vary by state. Personalized alerts: Alerts notifying you of your specific filing requirements and due dates, simplifying business compliance. Amendments: File up to two official changes about your business each year with the Secretary of State, such as a new name, address, or ownership. Updated Beneficial Ownership Information Reports: Additional filings for any changes to identifying information.

What is LegalZoom's Compliance Filings plus Licenses & Permits package?

Keeping your business compliant is critical to maintaining your good standing status and avoiding penalties, fines, and imprisonment. With Compliance Filings plus Licenses & Permits, you’ll satisfy the new beneficial ownership information reporting requirement and all the additional compliance filing requirements offered in our Compliance Filings package. Plus, we’ll help you secure your required business licenses and permits:Custom summary of required federal, state, and local licenses and permits Direct access to all of your required applications, simplifying and expediting the process for you Upload, view, and share business licenses from your LegalZoom account Notifications on upcoming expiration dates and new license requirements

Why should a business use a service to submit the Beneficial Ownership Information Report?

The Corporate Transparency Act is one of the most important legislations to impact small businesses owners. Its latest requirement—the Beneficial Ownership Information Reporting Rule—is effective Jan. 1, 2024 and mandates that most limited liability companies and corporations must file the beneficial owner report.Navigating the new law can be confusing and distracting for small business owners who are otherwise focused on running and growing their business. A service like the one provided by LegalZoom makes it easier for customers to get ahead of the requirement as soon as possible, and comply with the law to avoid criminal and civil penalties, which include imprisonment for up to two years, a fine of up to $10,000, and/or a fine of up to $500 per day.With LegalZoom, customers can avoid noncompliance with three easy steps, reducing their risk while saving time and money. Customers start by answering a few simple questions about the individuals who own or control their business so the report is personalized and accurate. Then, a custom report that satisfies the beneficial ownership information reporting requirement is created and filed. Once we file the personalized report with the Financial Crimes Enforcement Network, we’ll provide confirmation of completion.

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Name: Beneficial Ownership Information Report
Brand: LegalZoom
Price: 149 USD
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As part of the Corporate Transparency Act, a new federal mandate requires that businesses file a Beneficial Ownership Information Report to avoid criminal and civil penalties. We can help you to file in a compliant and stress-free way for only $149.

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Why use LegalZoom to file a Beneficial Ownership Information Report?

Understanding a new law that carries civil and criminal penalties, including imprisonment and fines, can be daunting. Eliminate the worry and risk of meeting this requirement with our easy and accurate report filing.

Get compliant

Satisfy the Corporate Transparency Act requirement with our help. We’ll file the information about the individuals who own or control your business with the Financial Crimes Enforcement Network (FinCEN).

Make things easier

Save time sifting through the complexities of a new federal law with our fast and easy report filing. We’ll ensure your filing meets all the requirements of the Corporate Transparency Act.

File with confidence

Get peace of mind with our accurate, compliant filing. You can be sure that we’ll include all information required by FinCEN and the new law. Plus, you’ll receive confirmation upon completion of the report.

Choose a plan to meet your compliance needs

One-time filing

Beneficial Ownership Information Report (BOIR)

Get your BOIR filed by us. We'll send your info to FinCEN so you comply with the new rule under the Corporate Transparency Act.

$149

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Beneficial Ownership Information Report includes:

Customized federally required report
Simplified process to help you file accurately with the government
Confirmation of successful submission to the Financial Crimes Enforcement Network (FinCEN)

Annual plan

BOIR plus Compliance Filings

Get BOIR plus help with ongoing compliance for annual reports, the latest state & federal filings, alerts, and more.

$199/year (renews annually)

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Beneficial Ownership Information Report plus:

Annual reports to satisfy ongoing state filing requirements
Personalized alerts notifying you of your requirements
Amendment filings with the Secretary of State for any business changes
Ongoing Beneficial Ownership Information Report filings for any changes to identifying information

Annual plan

BOIR, Compliance Filings plus Licenses & Permits

Get BOIR and Compliance Filings, plus help with licenses and permits to operate legally at the federal, state, county, and city levels.

$299/year (renews annually)

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BOIR, Compliance Filings plus:

Custom summary of required federal, state, and local licenses and permits
Direct access to all of your required applications, simplifying and expediting the process for you
Upload, view, and share business licenses from your LegalZoom account
Notifications on upcoming expiration dates and new license requirements

What is Beneficial Ownership Information Reporting?

You are required to file identifying information about the individuals who directly or indirectly own or control your company with the Financial Crimes Enforcement Network in order to satisfy requirements under the Corporate Transparency Act.

The Beneficial Ownership Information Reporting Rule goes into effect Jan. 1, 2024, and it’s important to understand this new law given the severity of criminal and civil penalties for failure to file, which include imprisonment and fines.

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Woman small business owner discussing how to file her Beneficial Ownership Information Report

How to complete the Beneficial Ownership Information Report in 3 easy steps

Correctly reporting the required information about those who own or control your business is key to avoiding serious civil and criminal penalties. We can help you easily and accurately meet those requirements.

Tell us about your beneficial owners

Answer a few simple questions about the individuals who own or control your business so your report is personalized and accurate.

We create and file the report for you

We’ll prepare a personalized report that satisfies the beneficial ownership information reporting requirement, and we’ll file it for you.

Receive confirmation of your filed report

Once we file your personalized report with the Financial Crimes Enforcement Network (FinCEN), we’ll provide confirmation.

Why get help with the Beneficial Ownership Information Report?

Avoid serious penalties

Prevent criminal and civil penalties, including imprisonment for up to two years and/or fines up to $10,000, and civil fines of up to $500/day.

Focus on what matters

Concentrate on your business instead of navigating the complexities of a new federally mandated rule under the Corporate Transparency Act.

Enjoy peace of mind

Feel confident and secure about your business, knowing you’re in compliance with the Financial Crimes Enforcement Network (FinCEN).

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Man in red shirt reviewing his Beneficial Ownership Information Report filing

What is the Beneficial Ownership Information Reporting Rule?

The Beneficial Ownership Information Reporting Rule under the Corporate Transparency Act is a new filing requirement of the Financial Crimes Enforcement Network (FinCEN), a bureau of the United States Department of the Treasury.

The rule creates transparency around company ownership structures and helps the federal government prevent financial crimes and fraud, such as money laundering, corruption, human trafficking, drug trafficking, tax fraud, and fraud against employees, customers, and other businesses.

Beneficial ownership information reporting supports the ongoing focus and efforts of the U.S. government to deter corporations who would hide or benefit from actions that harm others.

Who is a beneficial owner?

A beneficial owner under the Corporate Transparency Act is an individual who directly or indirectly: (1) owns or controls at least 25% of your company’s ownership interests, or (2) exercises substantial control over your business. Common examples of someone that exercises substantial control can include the following:

An important decision-maker for the reporting company
A senior officer (president, chief executive officer, chief financial officer, general counsel, chief operating officer, or any other officer with a similar function)
An individual with the authority to appoint or remove certain officers or a majority of directors (or similar body) of the company

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Small business owners laugh while discussing the newly required Beneficial Ownership Information Report.

What are the penalties for not filing?

Each business is responsible for filing a Beneficial Ownership Information Report which includes all of the individuals who control or own the business. However, a beneficial owner of a business who willfully fails to follow the reporting requirement and filing rules, or who misleads the Financial Crimes Enforcement Network, will face personal liability in the form of both criminal and civil penalties for noncompliance with the Corporate Transparency Act.

Failure to comply can lead to criminal penalties of imprisonment for up to two years and/or a fine of up to $10,000, and a civil penalty of up to $500 per day.

Even if a reporting company files the report on time, penalties can be imposed if the report does not include the correct information. It is critical that the reporting company’s filing is accurate. We can help you ensure accurate filing with a simplified reporting and filing process, satisfying the relevant law.

When is the Beneficial Ownership Information Report deadline?

The Beneficial Ownership Information Reporting Rule went into effect Jan. 1, 2024, so it’s important to get informed now about how to satisfy the requirements. The deadline varies depending on your date of formation, which we can help you determine, and we can help you stay on top of the process with notifications leading up to your filing deadline.

Generally, business entities formed before Jan. 1, 2024 will have until Dec. 31, 2024 to file. Business entities formed on or after Jan. 1, 2024 will have 90 days after formation to file. Business entities that amend their formation documents on or after Jan. 1, 2024 will have 30 days to submit a new report.

Taking care of this requirement will help you avoid criminal and civil penalties for failing to comply, including imprisonment for up to two years, a fine of up to $10,000, and/or a fine of up to $500 per day.

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How do I get a Beneficial Ownership Information Report?

With our Beneficial Ownership Information Report service, you’ll be notified when it's time to file your report. We’ll request the information needed to file, and we’ll create an accurate report that includes the identifying information about the individuals who own or control your business, satisfying the beneficial ownership information reporting requirement.

Then, we’ll file for you in a timely manner with the Financial Crimes Enforcement Network (FinCEN) and confirm successful completion for your peace of mind that you’ve satisfied the compliance requirement.

What is in the Beneficial Ownership Information Report?

The Beneficial Ownership Information Report includes several pieces of information about the reporting company, such as its full legal name, any trade or DBA names, its address, federal tax ID number (or EIN), and the jurisdiction where it was created.

The report also includes the owners’ full legal names, birth dates, current addresses, images of acceptable identification documents (such as a passports or driver's licenses), along with the issuing jurisdiction and the document's ID number. If the person who filed your entity formation documents (known as the applicant) is not one of the beneficial owners, the applicant must also provide the same information as the beneficial owners.

Using our service simplifies the process for reporting and filing the required information with the Financial Crimes Enforcement Network, saving you time and stress related to deadlines and accurate filing of your report.

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How are LLCs impacted by the Beneficial Ownership Information Reporting Rule?

Owners of a limited liability company (LLC) need to file the new report with the federal agency and provide basic contact information about the company and its owners (known as members). This requirement applies to single-member and multi-member LLCs.

Who is exempt from Beneficial Ownership Information Reporting?

Most small business entities are not exempt from this requirement. Entities that are exempt from beneficial ownership information reporting include publicly traded companies, tax-exempt nonprofit organizations, certain large operating companies, and others that meet specific requirements. The Financial Crimes Enforcement Network lists 23 types of exempt entities that do not qualify as reporting companies and certain individuals that can’t be listed as a beneficial owner under the reporting requirement.

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