Written by: Baixue Ma, Tax Advisory Lead

The Corporate Transparency Act (“CTA”) has introduced a new filing obligation for businesses, namely the Beneficial Ownership Information (“BOI") reporting with the Financial Crimes Enforcement Network (“FinCEN"). BOI reporting requires businesses to disclose information about individuals who have significant control or ownership interests in the entity. This measure enhances transparency, helping to prevent financial crimes such as money laundering and terrorism financing. Failure to file BOI reports on time or submitting inaccurate information can result in significant penalties including: fines, legal action against both the entity and responsible individuals, and increased scrutiny from regulatory authorities.


Who Needs to File BOI Reports?

Most business entities meet the definition of a “reporting company” and they can be either domestic or foreign, including: corporations, limited liability companies (LLCs), partnerships and other entities registered with state authorities. Certain entities, such as large operating companies (having more than 20 full-time employees employed in the U.S. and having more than $5 million in gross receipts or sales), regulated financial institutions (banks, credit unions, investment companies or investment advisers, pooled investment vehicles, etc.), tax-exempt entities, and inactive entities, may be exempt from this requirement. Please reference FinCEN’s guidance on exemptions.

What Constitutes a Beneficial Owner?

A beneficial owner is an individual (i.e., natural persons) who:

Directly or indirectly owns 25% or more of the equity interests of the entity.
Exercises substantial control over the entity through ownership, voting rights, agreements, or other means.

How to file BOI Reports

1. Gather Required Information

For the reporting entity, collect full legal name; trade name or DBAs, if applicable; U.S. business address; state, tribal or foreign jurisdiction information; and your IRS TIN or EIN.
For the beneficial owner, collect full legal name; date of birth, primary residence or business address, identifying number and issuing jurisdiction, and an image of a non-expired document, such as a U.S. passport or driver’s license.

2. Choose the Filing Method

You can file your BOI report either via PDF submission or through an online portal. Each method has its advantages and challenges:

PDF Submission: You can download the form from the FinCEN portal and save it on your desktop with a new name. This allows you to work on the form at your own pace and save your progress. Clicking “validate” locks in your information and alerts you if there are any missing data points. However, it will not check for spelling errors or mistyped information. Once ready to file, clicking the “Submission” button will direct you to the FinCEN website to sign off as the submitter and upload the file. Please note that navigating from field to field in the PDF form can be a bit clunky compared to the online form.
Online Portal: Unlike the PDF method, you cannot save your progress, so your information will be lost if you leave the site for completing your submission. The online form automatically validates the fields as you enter them. The submission process is almost identical to the PDF submission.

3. Keep Records

Maintain copies of your submitted BOI reports and any supporting documents. This is crucial for future reference and compliance audits.

Who Can Help You With This Filing?

1. BOI reporting might seem daunting, but FinCEN has a very comprehensive FAQ’s page. As such, startups can certainly file this internally, which is the most cost effective option.

2. airCFO has a trusted partner for this filing - CorpNet and you can start the process here. Please reference their pricing here. You can reach out to taxteam@aircfo.com if you run into any questions with the CorpNet website.

3. Please note that the BOI reporting is a legal requirement for businesses. Hence, your legal counsel should be able to help you with this.

Important disclaimer: airCFO is not a law firm and does not provide legal advice in connection with the BOI reporting. airCFO assumes no responsibility for advising you on the legal or regulatory aspects of the CTA. Additionally, airCFO assumes no responsibility for submission of any reports to FinCEN, including the BOI. It should be noted that the entity's management is responsible for complete compliance with the CTA.

When to File?

Timely filing is crucial to avoid significant penalties and legal actions. Key filing deadlines include:

A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025 to file its initial beneficial ownership information report.
A reporting company created or registered on or after January 1, 2024, and before January 1, 2025, will have 90 calendar days after receiving notice of the company’s creation or registration to file its initial BOI report. This 90-calendar day deadline runs from the time the company receives actual notice that its creation or registration is effective, or after a secretary of state or similar office first provides public notice of its creation or registration, whichever is earlier.
Reporting companies created or registered on or after January 1, 2025, will have 30 calendar days from actual or public notice that the company’s creation or registration is effective to file their initial BOI reports with FinCEN.
Changes in BOI: If there are changes in beneficial ownership (e.g., a new owner acquires a significant stake), the entity must update its BOI report within 30 days of the change.
Remember: BOI reporting is not an annual requirement. A report only needs to be submitted once, unless the filer needs to update or correct information.