New Beneficial Ownership Report Required by LLCs

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Last Updated on March 1, 2024 by Carolyn

A Question about Beneficial Ownership Reports (BOI)

A blog reader had the following question, and I thought the question and answer merited a dedicated post since this new reporting requirement applies to all LLCs, new and old as well as other business entities.

Koreen Allen of Green Roots Botanicals asks:

As an LLC owner, I would like to know more about the beneficial ownership report required by LLCs”

Beneficial Ownership Reports (BOI) What are they?

Beneficial Ownership Reports (BOI) are a new report that needs to be filed under the Corporate Transparency Act (CTA). Its purpose is to allow the Financial Crimes Enforcement Network (FinCEN) and other agencies to protect US national security and the US financial system from illicit use. The information provided on these reports will assist national security, intelligence, and law enforcement agencies, state, local, and Tribal officials, and financial institutions in preventing drug traffickers, fraudsters, corrupt actors, and proliferators from laundering or hiding money and other assets in the United States.

Who is Required to File a BOI Report?

Beneficial Ownership Reports are a new filing requirement for domestic and foreign companies. Domestic reporting companies are corporations, limited liability companies (LLCs), and any entity created by the filing of a document with the Secretary of State or similar office under the law of a state or Indian tribe.

The BOI form gathers information about beneficial owners.

Beneficial owners are individuals who:

1. directly or indirectly exercise substantial control over a reporting company or,
2. own or control at least 25% of the ownership interest of a reporting company).

What Information is Required to FILE a BOI Report?

To file the BOI Report you will be required to have 4 pieces of information about each of the beneficial owners: Name, birthdate, address, and a unique identifying number and issuing jurisdiction from an acceptable ID document as well as an image of this document.

You will also need to have the following information:
Your company’s registered name (as it appears on the registering document), your company’s Tax Identification number and tax identification type, Country, and State of Formation.

When are BOI Reports Due?

The effective date of this legislation is Jan 01, 2024. Reporting companies created or registered before January 01, 2024, will have until Jan 01, 2025, to file their initial reports, while reporting companies created or registered after January 1, 2024, will have 30 days after receiving notice of their creation or registration to file their initial reports.

Tip: “The notice of their creation or registration” mentioned above would be the notice you receive from the Secretary of State confirming the filing and processing of your entity.

Does the Report Have to Be Filed Annually?

Initial BOI reports are required to be filed as per the dates outlined in the above paragraph. The report does not have to be filed annually, but the information contained within it must be kept updated.

Updating Information Previously Reported

Reporting companies have 30 days to report changes to the information in their previously filed reports and must correct inaccurate information in previously filed reports within 30 days of when the reporting company becomes aware or has reason to know of the inaccuracy of information in earlier reports.

What’s the Hurry?

If your LLC or corporate entity was in existence before January 01, 2024, you have until January 01, 2025, to file your BOI report, but I recommend filing the report now while it’s on your mind and then you don’t have to worry about it. The penalties for late filing are onerous

How to File Your Initial BOI Report.

1. The BOI report is to be filed at: Fincen.gov
2. Navigate to the website above. The First Heading Under the green bar is “Need to file a Beneficial Ownership Information Report? Click on the Blue Button “File Your Report Now” as circled in the image below.

 

     3. This will take you to this page:

. 4. Choose the method you’d prefer to use to file your report:

a) File PDF BOIR-with this method you’ll download a fillable BOI report form. You must have Adobe reader to opt for this method.
b) File Online BOIR

Which method to choose?

If you have all the information required as listed under “What Information Do I need to File Above“, choose option b) file online BOIR  so that you can get it filed straight away.

If you’re missing documentation choose option a) File PDF BOIR so that you can save the file when you have it partially completed, and resume completion when you have complete documentation.

Proceeding with Option B File BOIR Online

A page will open with the following questions:

Type of filing: Choose “Initial” for your initial report
Click Next
Check Box 3 “Create FinCen ID “. Once the report is filed and accepted you will then receive a FinCen ID for the company which makes accessing the company information simpler in the future.
Fill in Lines 5 & 6. Important: Note that the reporting company legal name should be exactly as it is on your company’s business registration document.
Line 7: Choose your tax ID type (most commonly EIN)
Line 8: Enter your tax id # (without dashes)
Line 9: Leave blank unless you have a foreign tax ID
Line 10a Fill in (usually USA)Line 10b: The state where your company is organized.
Line 10 c&d: For most filers, this is left blank.
Fill in LIne 10-15 with the business’s current physical address
Line 16 Check the box if you registered your company before 01/01/2024. If your company was registered after 01/01/2024 don’t check this box.
Line 18-33 Skip these lines if you checked Line 16. If you didn’t check line 16 you’ll need to complete LInes 18-33 with data for the Company applicant. The company applicant will be the organizer listed on your state registration.
Line 18: Fill in the FinCen ID of the company applicant (leave blank if you don’t have one yet)
Line 19-29 are self-explanatory
Line 30-33 This is where you will input & upload your Company Applicant Identification which can be any of the following:

• A non-expired state issued drivers license,
• A non-expired state/local/tribe-issued identification document issued for the purpose of identifying the individual
• A non-expired US passport

And only if the company applicant doesn’t have one of the above-identifying documents, a non-expired foreign passport.

Line 35-51 is where you will input information about beneficial owners and upload an ID for each (note that only certain boxes for Line 50 will require completion depending on the type of ID you have uploaded). The ID image must be in form jpg/jpeg/png or pdf and the file name must not contain any spaces.
Click the Blue Box Add Beneficial Owner to add more beneficial owners
When Complete click Next.

Yeah! This is the final screen! Fill in your email and name. Check the certification box and complete the captcha. Then click the blue box “ Submit BOIR”.

A submission status confirmation page should pop up with the status: “Filing Successful.”
Download this page via the blue box at the bottom of the page. This will be your proof of filing. Once downloaded you can close this page, breathe a sigh of relief, you are done!

If you are confused about what to enter at any point in the filing, click on the arrow pointing down beside “Need help?”-the site will give you line-specific information for that line. You can also find information on the Fincen’s BOI Faq page

What Happens If I don’t file a BOI Report?

The penalties for not filing a BOI report when required are onerous. Per Fincen:

A person who willfully violates the BOI reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues. That person may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000. Potential violations include willfully failing to file a beneficial ownership information report, willfully filing false beneficial ownership information, or willfully failing to correct or update previously reported beneficial ownership information.

Did you read my post 9 Questions Small Business Owners are Asking?

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