November 6, 2024

What is a Beneficial Ownership Report (BOIR) and do I need to file one?

A beneficial ownership report is a document that identifies the individuals who ultimately own or control an entity, such as a corporation, limited liability company (LLC), or other types of business organizations. The report is typically filed with a government agency or regulatory body, and it helps ensure transparency in business ownership and control, particularly to prevent illicit activities like money laundering, tax evasion, and corruption.

Who Needs to File a Beneficial Ownership Report?

The requirement to file a beneficial ownership report varies by country and jurisdiction, but in general, the following types of entities may need to file:

1. Corporations, LLCs, and Limited Partnerships:

In the United States, the Corporate Transparency Act (CTA), which came into effect in 2024, mandates that most corporations, LLCs, and similar entities registered in the U.S. must report their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). This includes both domestic and foreign companies doing business in the U.S.
Certain exempt entities, like large, regulated companies (e.g., publicly traded companies or large subsidiaries), are not required to file.

2. Trusts and Partnerships:

Trusts may also be required to disclose their beneficial owners, depending on the jurisdiction, especially if they have business activities in the country where reporting is required.
Partnerships may also need to file reports, particularly if they are involved in regulated industries or meet certain size thresholds.

3. Foreign Entities:

Foreign entities that do business or own property in certain countries, like the U.S., may also be required to file a beneficial ownership report if they meet specific criteria (such as having a physical presence or economic ties to the jurisdiction).

Who Does Not Need to File?

Certain types of entities are exempt from the reporting requirements, including:

Large, publicly traded companies.
Regulated financial institutions (banks, insurance companies, etc.).
Entities with a certain number of employees or a high level of assets.
Inactive Entities

When Do I Need to File by?

1. New Entities (Created after January 1, 2024):

Deadline: New entities (corporations, limited liability companies (LLCs), or similar entities) must file their beneficial ownership report with FinCEN within 30 days of their formation or registration.
Example: If a new LLC is formed on January 15, 2024, the beneficial ownership report must be filed with FinCEN by February 14, 2024.

2. Existing Entities (Formed before January 1, 2024):

Deadline: Existing entities that were formed before January 1, 2024 must file their initial beneficial ownership report with FinCEN by January 1, 2025.
Example: If a company was incorporated in 2010, it must submit its initial beneficial ownership report by January 1, 2025.

3. Updates to Beneficial Ownership Information:

Deadline for Updates: Entities must update their beneficial ownership information within 30 days of any changes to their beneficial ownership or control.
Examples of Changes:
- Change in the ownership structure (e.g., someone acquires or loses a 25% stake in the company).
- Change in control or the individuals holding substantial control over the entity.
- New beneficial owners are identified, or previously identified owners no longer meet the criteria.

4. Ongoing Reporting Requirements:

After the initial report and updates, entities are generally required to keep their information up to date and file additional reports as necessary, particularly if the beneficial ownership information changes.

Filing Process:

In the U.S., companies must file a Beneficial Ownership Information (BOI) report with FinCEN.
- You can use the following link to take you to the FinCen website which will allow you to file this for FREE on your own:
- https://boiefiling.fincen.gov/
Filing is typically done when the entity is first created or registered and when there are updates or changes to the beneficial ownership structure.

Failure to File Penalties:

Entities that fail to file a report, file inaccurate information, or fail to update their beneficial ownership information within the required timeframes may face significant penalties:

Civil penalties of up to $500 per day for failure to comply.
Criminal penalties for willfully providing false information, which can include fines up to $10,000 and/or imprisonment.