Why the BOI?

The Beneficial Ownership Information Report (or BOI as it's commonly known) implements provisions of the Corporate Transparency Act (CTA), enacted by Congress in January 2021.

The CTA legislation was inside an omnibus Defense funding bill. Advocacy for the law came largely from the Treasury Department, which justified the BOI Report as critical for combatting money laundering and the movement of terrorist and cartel funds.

The Treasury Department opined that these kinds of illegal operations often cloak themselves behind the cover of a small business. Therefore, the Department wanted a means of monitoring who actually controls entities of this nature. To serve that purpose, the Corporate Transparency Act mandated the Beneficial Ownership Information Report.

Electronic Filing Is Mandatory

Unlike Treasury reports such as income taxes, where both paper and online submissions satisfy filing requirements, the Beneficial Ownership Information Report only allows online or digitally-transmitted reports. To accommodate electronic filing, the Financial Crimes Enforcement Network (FinCEN) provides a web portal for completing the report online.

Compliance BOI™ vastly improves on the user-friendliness and efficiency of this portal with our SafeFile System™ and its Smart Screen Technology. This automated system makes the input process easier to understand, simpler to follow, and more helpful in terms of guidance.

Then, using electronic protocols approved by FinCEN, the SafeFile System™ structures user data properly and transmits it directly and securely to FINCEN. In addition, our Update Management Service (UMS) greatly reduces your burden to keep BOI reports continuously updated.

What the BOI Requires

The Beneficial Ownership Information Report directly impacts well over 30 million active AND inactive small businesses operating in the United States. By January 1, 2025, all small businesses affected by the legislation must identify and provide personal information on anyone whom the CTA describes as a "beneficial owner."

At first brush, satisfaction of this requirement might appear relatively simple. For millions of reporting companies, however, the task proves more daunting than first imagined. The complicating factor is how BOI regulations define a "beneficial owner."

As defined in BOI regulations, beneficial owners are not necessarily "owners" in the traditional sense of the word. Indeed, to be considered a beneficial owner, it's not even necessary for a person to currently hold stock, shares, equity rights, or any other financial investment in the business.

All that's required is to have what BOI guidance calls "substantial control" of the business. In explaining "substantial control," BOI guidelines include anyone who has "substantial influence over important decisions."

Unfortunately, what constitutes "substantial influence" is left rather vague and not precisely defined.

Instructions for the BOI merely offer a handful of highly-generalized examples of what constitutes substantial influence. (For more on these examples, consult the question, "Who is considered a beneficial owner?" on our FAQs page.)

Our SafeFile System™ counters the ambiguity surrounding this issue by guiding you through a process to refine and clarify who should be identified as a beneficial owner in your report.

After identifying the beneficial owners, you must then provide personal details about each of them in your BOI Report. For each beneficial owner, the Report requires the person's legal name, current residential address, and date of birth.

Further, the Report must include the serial number of a current government-issued photo ID for the individual, along with a scanned copy of the ID. Passports and driver's licenses are the preferred means of satisfying this requirement.

Please note that none of these items is optional. FINCEN computers reject submissions which omit any required item for even a single beneficial owner.

Filing Deadlines for Initial Reports

For businesses created or registered to do business prior to 2024, the deadline for an initial Beneficial Ownership Information Report is January 1, 2025.

For companies created or registered to do business after January 1, 2024 and before January 1, 2025, the reporting deadline is 90 days beyond the date on which a state's secretary of state (or the equivalent in a U.S. territory or native American tribe) gives notice of its legal recognition of the entity.

On January 1, 2025 this reporting deadline becomes more abbreviated. After that date, companies must file within 30 days of legal formation.

Update Requirements

Once the intial BOI Report has been accepted by FINCEN, timely updates must be made whenever certain changes occur within the company or with beneficial owners. For companies, this includes:

1. change of overall ownership
2. a name change
3. relocation of the primary place of business
4. a merger, acquisition, or reorganization which alters beneficial ownership of the company
5. becoming inactive as a company for a year or more
6. resuming business after a year or more of inactivity
7. a change in the make-up of an entity's beneficial ownership through:
   • promotions or realigned duties which add someone to beneficial ownership
   • a beneficial owner's transition to a position not considered a beneficial ownership role
   • resignations, retirements, or terminations of beneficial owners
   • the addition of a beneficial owner through inheritance or court action
   • a purchase or equity grant which gives an investor at least 25% of the entity's financial ownership or voting rights
   • the marriage or divorce of an investor who resides in a community property state and holds at least a 25% ownership stake in the company; or the death of such an investor's spouse
   • attainment of majority by a minor child who is a beneficial owner

For individual beneficial owners, events that may trigger an update requirement include:

1. name changes due to marriage
2. restoration of a former name after a divorce
3. name changes decreed by a court
4. home address changes
5. replacement of an ID on file with FinCEN
6. death of a beneficial owner

Filing Deadlines for Filing Update Reports

Update reports must occur within 30 days of the event which triggers the filing requirement, with one exception. Should a beneficial owner die who holds a 25% investment stake in the company, the deadline is 60 days beyond final settlement of the person's estate.

With so many factors which can mandate an update, and with even modest-sized companies having several people who qualify as beneficial owners, updates may be required several times per year. This places an immense monitoring and filing requirement on small firms.

We designed our affordable Update Management Service to relieve business owners of this burden. For an annual fee, we proactively coordinate an update system for you and automatically file required reports as they become due.

The statements on this page are general in nature. Verify that an exemption applies to your company.