The CTA of 2021 is a significant piece of legislation passed by Congress to improve transparency within the United States corporate landscape. This legislation requires the disclosure of Beneficial Ownership Information (BOI) to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. The BOI requires companies to report data on the individuals (natural persons) who either own or exert control over the company's operations.
BOIR stands for Beneficial Ownership Information Reporting. It's the process of submitting information about a company's beneficial owners to FinCEN.
Typically, corporations, LLCs, and similar entities, either established in the U.S. or registered to operate within the U.S., must file a BOIR. There are two main types of reporting companies: domestic reporting companies and foreign reporting companies.
- Domestic Reporting Companies are those like corporations or LLCs that have been officially formed through registration processes with state or tribal authorities in the U.S.
- Foreign Reporting Companies refer to companies based outside the U.S. that have formally registered to conduct business in the U.S. through state or tribal authorities.
There are twenty-three specific types of entities that are exempt from the reporting rule. There are specific criteria for each exemption that must be met. If you are not sure if you qualify for an exemption, you can speak to one of our team members.
- Security Reporting Issuer
- Governmental 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 Entity
- Entity Assisting a Tax-Exempt Entity
- Large Operating Company
- Subsidiary of Certain Exempt Entities
- Some Inactive Entities
Our team is dedicated to providing you with the support necessary to navigate the complexities of BOIR compliance and ensure that your company adheres to these crucial regulatory standards. If you need help determining if your company is exempt take our FREE BOI Quiz
The deadline depends on when your company was formed:
- Existing companies (formed before January 1, 2024): You must file your BOIR by January 1, 2025.
- Companies formed between January 1, 2024, and January 1, 2025: File your BOIR within 90 days of the company's formation date.
- Companies formed after January 1, 2025: File your BOIR within 30 days of the company's formation date.
- Important: changes to your company’s eligibility status or beneficial ownership must be filed within 30 days of the change.
It depends on whether you've officially registered your business with the government.
In the world of BOIR, registering a business means officially creating a legal entity that is separate from you, the sole proprietor. This separation is typically done by filing paperwork with your state government's Secretary of State office (or similar office).
Here are some examples of registering a business that would require a BOIR filing:
Forming a Limited Liability Company (LLC): This creates a separate legal entity from you, protecting your personal assets from business liabilities.
Forming a Corporation: This creates a separate legal entity with its own tax ID and structure, offering more complex ownership options.
Registered or not registered?
- Not Registered: If you haven't registered your sole proprietorship with your state government, you generally don't need to file a BOIR. This is true even if you have an EIN or a DBA.
- Registered: If you have officially registered your sole proprietorship with your state government, you need to file a BOIR.Â
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A beneficial owner is any individual who meets one or both of these criteria:
Substantial Control: The person has significant influence over the company. This can include:
- Being a senior officer (president, CFO, CEO, etc.)
- Having the power to appoint or remove officers or directors
- Making important decisions about the company's business, finances, or structure
Having other forms of control as outlined in FinCEN's Small Entity Compliance Guide.
Ownership Interest: The person owns or controls at least 25% of the company's ownership interests. This could include shares, voting rights, or other ownership mechanisms.
Important notes:
- A person can be a beneficial owner due to either substantial control OR ownership interest. They don't need to meet both criteria.
- Certain individuals, like general accountants or lawyers, are usually not considered beneficial owners (unless they meet other criteria).
- FinCEN's Small Entity Compliance Guide offers more detailed checklists and examples to help identify beneficial owners.
A company applicant is an individual involved in the official creation or registration of a reporting company (those required to file a BOIR). There can be up to two company applicants:
Direct Filer: the person who directly submits the creation or registration documents to the state government.
Primary Director: if multiple people are involved, this is the person who was mainly responsible for deciding what to file and when and where to file it.
Important notes
- Only companies formed or registered after January 1, 2024, need to report company applicants.
- Company applicants cannot be removed from a BOI report, even if they no longer work with the company.
- Accountants and lawyers might be company applicants if they played a primary role in preparing and filing the company's formation documents.
- Providing general legal or accounting advice does NOT typically make an accountant or lawyer a company applicant.
Only the following forms of identification are acceptable and must be non-expired:
- US Driver's License: includes licenses issued by any US state, commonwealth, territory, or possession
- State or Local Government-Issued ID: includes non-driver state ID cards or IDs issued by a local government or an Indian Tribe
- US Passport: a valid passport issued by the US government
- Foreign Passport (Special Circumstance): A valid passport issued by a foreign government is ONLY acceptable if the individual does not possess one of the other three forms of identification
Generally, no. You primarily focus on reporting your own company's information, its beneficial owners, and (if applicable) company applicants.
There is a limited case where you can report your parent company's name instead of your beneficial owner information. This applies only if:
- All your beneficial owners hold their ownership in your company solely through the parent company
- The parent company is a type of entity exempt from BOIR filing
You must file an updated BOIR within 30 days of the change occurring. This applies to changes in your company's information or its beneficial owners.
Examples of changes requiring an update
- Company changes: new business name, address change, etc.
- Beneficial owner changes: new beneficial owner (e.g., new CEO or due to ownership stake changes), change in a beneficial owner's name, address, or identifying ID number.
Changes that DO NOT require a BOIR update
- Change in ownership interest type: if a beneficial owner's type of ownership interest changes (e.g., conversion of preferred shares to common stock), you don't need to file an updated BOIR.
- Changes to company applicants: you don't need to update the BOIR for any changes related to company applicants.
To file an update, you must resubmit all the information, including the portions that remain unchanged.
No. There is no annual filing requirement for BOIRs. You must file:
- Initial BOIR: upon the formation or registration of your company, if it's a
reportable entity. - Updated or Corrected BOIRs: only if the beneficial ownership information changes or if you discover errors in a previous report.
There are serious consequences for violating BOIR requirements:
- Civil Penalties: you could face fines of up to $500 for each day the violation continues.
- Criminal Penalties: willfully violating BOIR rules can result in up to two years in prison and a fine of up to $10,000.
What is considered a willful violation?
- Intentionally failing to file a BOIR.
- Intentionally providing false or misleading information in a BOIR.
- Intentionally failing to update or correct a BOIR with accurate information.
Who can be held responsible?
- Reporting Companies: the company itself can be penalized.
- Individuals: senior officers and those directly filing false reports can be held liable. This includes individuals who give false information to those tasked with BOIR filing.
Important Notes:
- FinCEN recognizes this as a new requirement. Mistakes corrected within 90 days of the original deadline might avoid penalties.
- Third-Party Filers: individuals filing on behalf of a company can also be held liable for submitting willfully false reports.
- Beneficial Owners and Company Applicants: those who willfully refuse to provide accurate information to the reporting company could be liable, as this would be causing the company's failure to file correctly.
FinCEN carefully controls access to BOI to protect its confidentiality. Authorized users include Federal, State, local, and Tribal officials involved in law enforcement, national security, and intelligence work. Foreign officials may also access BOI, but only if their request is made through a US Federal government agency. Financial institutions have limited access under specific circumstances; they must obtain consent from the reporting company. Furthermore, regulators of those financial institutions can access the information for supervisory purposes. FinCEN employs rigorous security measures to protect BOI, storing it in a secure database with the highest level of protection. Authorized users receive training to ensure responsible handling and protect the data's confidentiality.
Here's how, depending on who you are:
Individuals: Starting January 1, 2024, you can use an online form at https://fincenid.fincen.gov. You'll need to provide:
- Full legal name
- Date of birth
- Address
- Identification details (type, number, issuing jurisdiction)
- Image of your ID document
Companies: You can request an identifier directly on your initial BOIR filing or by filing an updated BOIR later specifically for this purpose. Just check the box “Request to receive FinCEN identifier (FinCEN ID) in the BOIR form.
- An updated BOI report may be submitted to request a FinCEN ID, even if no additional information needs to be updated.
Yes. Both individuals and companies must update or correct information associated with their identifier within 30 days of any changes or discovering inaccuracies.
- Individuals: Update directly through the FinCEN identifier application
- Companies: Update by filing a revised BOIR
Can BOI Reporting Pros take care of my BOIR reporting for me?
We handle the entire process
You provide the necessary information about your company and beneficial owners, and we’ll carefully compile and submit your BOIR directly to FinCEN.Seamless communication
We’ll keep you updated throughout the process and ensure you understand each step.
Clear confirmation
Once your BOIR is successfully filed, we’ll provide you with official confirmation and a downloadable transcript of the report for your records.
