BOI Simplified
The Busy Business Owner's guide to the new FinCEN reporting requirement
What is BOI/BOIR?
What: Beneficial Ownership Information Report.
When: Brand new requirement – Effective Jan 1, 2024.
Who’s Requiring: Mandated by the Corporate Transparency Act. Managed by FinCEN (FINancial Crimes Enforcement Network), under the Department of Treasury.
Who must file: If you have a registered business entity, you almost certainly must file. The only exceptions are primarily for sole proprietorships, non-profits, etc.
Who is included in the report: Individuals with at least 25% ownership interests, or “substantial control” (i.e., CEO, CFO, COO). Most traditional employees are exempt.
Purpose: To fight financial crimes like money laundering.
Risks of not filing: violations may be subject to civil penalties of up to $500 for each day that the violation continues and criminal penalties of up to two years imprisonment and a fine of up to $10,000.
Drop-dead Date: Businesses are required to file now, with a drop-dead date of January 1, 2025. Newly formed entities must file within 90 days of formation.
Info needed: The report includes basic info for the business and “beneficial owners”, including their names, birthdates, addresses, and a photo ID.
Ongoing Reporting: Companies must file an updated BOI for any changes or correct inaccuracies within 30 days. There is no annual reporting requirement.
Required Info
Employer Identification Number (EIN)
What is an EIN?
A federal tax ID number, or an EIN, is a nine-digit number that identifies your company with the IRS. This nine-digit identifier is a bit like a Social Security number (SSN), but for your business. It may also be referred to as a “TIN” on some documents.
Where can I find it? (pick the easiest one)
1. Business Tax Return (top right on page 1)
2. 1099’s issued (“Payer’s TIN”)
2. Articles of formation/organization
3. Business loan application
4. EIN Confirmation Letter (CP 575)
5. Business Credit Report
6. Payroll documents (like payroll tax filings)
7. Business licenses / permits
8. Loan Documents
9. Call IRS IRS: 800-829-4933
Identify my company’s beneficial owners
Step 1: Identify individuals who exercise substantial control over the company.
Step 2: Identify the types of ownership interests in your company and the individuals that hold those ownership interests.
Step 3: Calculate the percentage of ownership interests held directly or indirectly by individuals to identify individuals who own or control, directly or indirectly, at least 25 percent of the ownership interests of the company.
If any of the following apply to an individual, then they must be added to the BOI Report:
1. Does your company have a president, chief financial officer, general counsel, chief executive officer, or chief operating officer?
2. Does your company have any other officers that perform functions similar to those of a President, chief financial officer, general counsel, chief executive officer, or chief operating officer? Note: One individual may perform one or more functions for a company, or a company may not have an individual who performs any of these functions.
3. Does your company have a board of directors or similar body AND does any individual have the ability to appoint or remove a majority of that board or body?
4. Does any individual have the ability to appoint or remove a senior officer of your company?
5. Does any individual direct, determine, or have substantial influence over important decisions** made by your company, including decisions regarding your company’s business, finances, or structure?**
*Important decisions include decisions about a reporting company’s business, finances, and structure. An individual that directs, determines, or has substantial influence over these important decisions exercises substantial control over a reporting company.
**Certain employees who might fit this description are nevertheless exempt from the beneficial owner definition.
6. Are there any other individuals who have substantial control over your company in ways other than those identified in 1-5 above?
Acceptable forms of Identification
The only acceptable forms of identification are:
1. A non-expired U.S. driver’s license (including any driver’s licenses issued by a commonwealth, territory, or possession of the United States)
2. A non-expired identification document issued by a U.S. state or local government, or Indian Tribe
3. A non-expired passport issued by the U.S. government
4. A non-expired passport issued by a foreign government (only when an individual does not have one of the other three forms of identification listed above).
FinCEN identifiers
What is a FinCEN Identifier (FinCEN ID)?
A “FinCEN identifier” is a unique identifying number issued to an individual or an entity by the FinCEN, a bureau of the U.S. Department of the Treasury.
What does a FinCEN ID do?
If you have a FinCEN ID, that FinCEN ID can be submitted on a BOIR instead of your name, date of birth, address, and unique identifying document number, jurisdiction, and ID. This will make it easier to file BOIR updates in the future or if you have multiple entities to report.