Guidance for Business Owners: Beneficial Ownership Information Reporting Requirements

**Since the time this article was published, enforcement and the deadline for BOI reporting was put on hold due to pending court cases. New information will be provided here when there is final resolution.**

To combat illegal financial activities, Congress enacted the Corporate Transparency Act (CTA) in 2021, mandating that many U.S. companies disclose information about their owners or controllers.¹ The U.S. Department of Treasury’s intent is to reduce activities such as money laundering, drug trafficking, terrorism, and corruption, all of which can thrive in environments of corporate anonymity. The CTA reporting requirement was issued in 2022 and went into effect on Jan. 1, 2024 — it is a free and one-time reporting process (may require multiple reporting if updates need to be conveyed). 

Who is required to report BOI? 

The mandate generally applies to U.S. corporations, limited liability companies (LLCs), and entities that were created by filing a document with a state office or Indian tribe. Therefore, if you are an entrepreneur with an LLC or operating a small side business LLC, this law applies to you.  

The required data is referred to as “beneficial ownership information (BOI)” by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) bureau, and reporting laws apply to individuals who own or control at least 25% of a company or have substantial control over it. There can be multiple BOIs of a reporting company; there is an expected minimum of one and no maximum. 

• Individuals with substantial control generally are senior officers or someone who can appoint or remove a senior officer, a majority of the board of directors, or similar groups and positions of authority. This would include a president, chief financial officer, general counsel, chief executive officer, and chief operating officer. Also, individuals who are important decision-makers in the company’s business, structure, and finances. 

• Individuals who have ownership interests of at least 25% typically have equity, stock, or voting rights or instruments that can be converted into them; they may also have capital or profit interests. The option or privilege to purchase, sell, or subscribe to a share or interest is also considered as part of ownership. A trustee, beneficiary, or grantor with control over assets related to ownership interests may also be required to report. There may be some exemptions for individuals, such as minors, employees, inheritors, creditors, and nominees or agents acting on behalf of a beneficial owner. 

Reporting companies that are required to report company applicants will also have to identify and provide information for at least one applicant. The applicant is generally an individual who directly files the document that created the company or someone who directs or controls the filing action. 

There are 23 company exemptions to the law, listed in the chart below, which means the companies do not have to submit BOI reporting to FinCEN. There are more details about the exemptions found in FinCEN’s Small Entity Compliance Guide.  

Exemptions to BOI Reporting Companies 

When is BOI reporting due? 

• Jan. 1, 2025: If you formed your company before 2024 and are required to report and haven’t yet done so, you must file your initial BOI report by Jan. 1, 2025, to avoid penalty. 

• 90 days from registration: If your company was created after Jan. 1, 2024, you have 90 days from the date of registration to report.  

• 30 days from registration: Reporting companies created or registered on or after Jan. 1, 2025, will have 30 calendar days from actual or public notices that the company’s creation or registration is effective to file their initial BOI reports with FinCEN. 

According to FinCEN, if the BOI reporting requirements 2024 are not met willfully, or false or fraudulent BOI is submitted willfully, there could be civil penalties of up to $500 per day or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000. 

What BOI information is required? 

The BOI reporting requirements include information on your company, beneficial owners, and, for companies created or registered on or after Jan. 1, 2024, company applicants. There are also four reporting rules that may apply to your company’s reporting obligations: if the company is owned by exempt entity, minor child, if it is a foreign pooled investment vehicle, and if company applicant is reporting for existing companies.  

When you submit BOI reporting, you’ll be able to request a FinCEN identifier for the company which can be used in place of entering personal information in BOI reports, expediting the submission process. 

If an individual has obtained a FinCEN identifier and provided it to a reporting company, the reporting company may include such FinCEN identifier in its report instead of the information required about the individual. 

Source: FinCEN.gov 

Who can help with questions about BOI reporting? 

It may be helpful to start by reading FinCEN’s Small Entity Compliance Guide. For additional information and assistance, you are also encouraged to visit FinCEN’s BOI website or contact FinCEN through its web page.  

Where is BOI reporting done? 

When you’re ready to get started, here’s how to access the online reporting process: 

1. Go to FinCEN’s BOI E-Filing website 
2. Select the tab for File BOIR or Select the Get Started button for BOI E-Filing 

Mercer Advisors provides customized financial solutions for professionals and business owners to help with meeting your financial goals. Our comprehensive wealth management addresses both personal and work-related needs.  

If you are not a Mercer Advisors client and are interested in learning more about how we can help with selling your business, transitioning to a new role, participating in an IPO or recapitalization — as well as other business matters such as BOI reporting — let’s talk. 

1. “Small Entity Compliance Guide,” Financial Crimes Enforcement Network, Dec. 2023.