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What is the Beneficial Ownership Information
(BOI) Report?

Updated on August 12, 2024 by
Stephanie Glanville, TaxBandits
Stephanie

Written by Stephanie Glanville

Stephanie Glanville is the Marketing Manager of TaxBandits. She has several years of experience with IRS tax forms and the funtionality of TaxBandits. With a passion to help business owners better understand their IRS tax forms and filing, she aims to create content that is valuable and informative.

Table of Contents:

1. What is the Corporate Transparency Act (CTA)?

In 2021, Congress passed the Corporate Transparency Act on a bipartisan basis. This law created a new regulation that required most small businesses to submit the BOI report to FinCEN. The significant aspect of this CTA law was that it was enacted to prevent companies from illegal activities such as money laundering, financial terrorism, and serious
tax fraud.

2. What is a Beneficial Ownership Information Report?

A Beneficial Ownership Information (BOI) Report is a comprehensive report that provides information regarding the business ownership structure and highlights significant control over a reporting company. The BOI report contains essential information such as the reporting company, beneficial owners, and company applicant information.

3. Who must file a beneficial ownership information report?

According to FinCEN, the business should meet the "Reporting company" definition to file the BOI Report.

These are classified into two categories:

  • Domestic reporting companies - Companies formed or established under the U.S. tax laws that include corporations, LLCs, limited partnerships, and limited liability partnerships (LLPs)
  • Foreign reporting companies - Companies formed or established outside the U.S. and doing their trade or business in the U.S.

4. Who is the beneficial owner?

A beneficial owner is an individual or an entity either directly or indirectly having a

  • Substantial control over a reporting company (or)
  • Owns or Controls more than 25% of the ownership interest in a reporting company

5. Who is exempt from beneficial ownership?

The following individuals are exempt from the beneficial owners:

  • Minor Child
    • The minor child's details have not been provided. Instead, the parent or guardian's information has been submitted. Once the child ages, the reporting company must submit the updated beneficial
      ownership information.
  • Nominee, intermediary, custodian, or agent
    • An individual holding the key position like nominee, intermediary, custodian, or agent
  • Employee
    • An individual who is working as a full-time employee in the reporting company and should not be employed in a higher position such as senior officer, CEO, CFO, or President
  • Inheritor
    • A person's future interest in a reporting company is demonstrated through inheritance rights. When the person invests their interest, this exemption is no longer valid, and the person becomes the beneficial owner of the reporting company.
  • Creditor
    • An individual must make a payment from the business to pay off a loan or debt.

6. How do you identify a beneficial owner?

Follow these steps and ways to identify the beneficial owners of a reporting company:

  • Step 1: Identify the person who has substantial control either directly or indirectly

    • Direct Ways
      • Representation of Boards
      • Voting power or voting rights of the authority or owner
      • Rights associated with financing or interest
    • Indirect Ways
      • Controlling more than one intermediary entities
      • Through arrangements, relationships, financial, or otherwise

  • Step 2: Identify the person who owns or controls the ownership interest either directly or indirectly, and also identify your company's interest type

    • Direct Ways
      • Share ownership with one or more individuals
    • Indirect Ways
      • Owning or controlling one or more intermediary companies or taking ownership interest in any intermediary companies
      • Through another person referring as a nominee, intermediary, custodian, or agent

  • Step3: After Identifying what type of ownership interest applies to your company and who owns or controls it, you should identify who has more than 25% ownership interest in the company

7. Which entities are exempt from the BOI reporting requirements?

These are the 23 types of entities that are exempt from submitting the BOI report:

  • Securities 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
  • An 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
  • Inactive entity

8. What are the types of BOI Reports?

Generally, there are four types of BOI reports:

  • Initial report
  • Update Report
  • Correct report
  • Newly exempt entity report

9. What information is required for beneficial ownership?

Businesses should provide the following reporting requirements in the BOI reports:

  • Type of BOI filing
    • Specify reporting types such as an initial report, corrected, updated, or newly exempt entity report.
  • Reporting Company information
    • Full Legal Name
    • Trade Name or DBA
    • Type of business
    • Address
    • EIN
  • Company Applicant information
    • Name
    • Date of Birth
    • Address (when the person submits the paper to register the company, provide the business street address otherwise, provide the residential address)
    • Unique Identification Number
    • Acceptable document images such as driver's license or passport
  • Beneficial Owners information
    • Name
    • Date of Birth
    • Address
    • Unique Identification Number
    • Acceptable document images such as driver's license or passport

10. When is the deadline to file BOIR?

The deadline for filing the BOI report depends on your company's establishment date

  • Existing companies formed before January 1, 2024, must submit the BOI report by January 1, 2025
  • Companies formed on or after January 1, 2024, must submit the BOI report within 90 days
  • Companies formed on or after January 1, 2025, must submit the BOI report within 30 days

11. What are the penalties for not filing the BOI report by the due date?

The penalties for not filing the BOI report within the due date:

  • Civil penalties range up to $591
  • Criminal penalties range from $10,000 or up to 2 years of imprisonment

12. How to File a Beneficial Ownership Report?

Here are the two ways to file a BOI report:

  • Submit a PDF BOI Report.
  • File Electronically.

For the seamless experience and the instant filing status, file your BOI report electronically. It simplifies the reporting process and ensures accurate and efficient submissions.

13. Choose TaxBandits to E-file your BOI Report

TaxBandits streamlines your BOI reporting with an easy-to-use platform designed for accuracy and security. Our solution includes:

  • Provide Step-by-step guidance
  • Schedule your BOI reports on your preferred date
  • Free corrections for a week following the initial submission
  • Instant status updates via email

14. How to Efile BOI Report with TaxBandits?

Follow the simple steps to e-file your BOI Report:

  • Choose BOI Filing Type (Initial, Correction, Updated, & Newly Exempt Entity)
  • Enter Reporting Company Details
  • Enter Beneficial Owner & Company Applicant Details
  • Submit your BOI Report to FinCEN

Finally, track your BOI Filing status from the dashboard. TaxBandits will email you the status of your BOI report.

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