Who Must File BOI Reports? Understanding the Types of Entities

Introduction: The Expanding Scope of BOI Reporting Requirements

As regulations surrounding Beneficial Ownership Information (BOI) become more comprehensive, a wide range of entities are required to file BOI reports with the Financial Crimes Enforcement Network (FinCEN). Understanding whether your business is required to submit BOI reports is crucial for ensuring compliance and avoiding penalties.

Many businesses are unaware that they fall under the scope of BOI regulations, leading to missed deadlines, inaccurate filings, and costly penalties. In this blog, we’ll break down the different types of entities that are required to file BOI reports, including corporations, LLCs, partnerships, and foreign-owned companies, and explain why complying with these requirements is so important.

What Is BOI Reporting?

Beneficial Ownership Information (BOI) reporting is the process of disclosing key information about the individuals who own or control a company. The goal of BOI reporting is to increase transparency in business operations, making it more difficult for bad actors to hide illicit activities like money laundering or tax evasion through complex ownership structures.

FinCEN’s BOI regulations require businesses to submit reports detailing the personal information of their beneficial owners, including:

• Full legal names
• Residential addresses
• Identification numbers
• Dates of birth
• Ownership or control percentages

For more detailed information on BOI reporting, visit our BOI Overview page.

Which Entities Are Required to File BOI Reports?

FinCEN’s BOI regulations apply to a broad range of business entities, both domestic and foreign. The following types of entities are required to file BOI reports:

1. CorporationsBoth domestic and foreign corporations that operate in the U.S. must file BOI reports. This includes corporations formed under state law as well as foreign corporations that have registered to do business in the U.S.
2. Limited Liability Companies (LLCs)LLCs, whether formed domestically or abroad, are subject to BOI reporting requirements. LLCs must disclose information about the individuals who own or control the company, including those who hold membership interests or other forms of ownership.
3. Limited Liability Partnerships (LLPs)LLPs, which are often formed for professional services such as law firms or accounting firms, are also required to submit BOI reports. The individuals who hold partnership interests or manage the partnership must be disclosed in these reports.
4. Limited Partnerships (LPs)LPs, which include both general partners and limited partners, must submit BOI reports detailing information about those who control or benefit from the partnership. This includes reporting on both general partners, who manage the partnership, and limited partners, who provide capital but do not participate in management.
5. Business TrustsTrusts that are created through state filings and operate as business entities are also required to file BOI reports. This includes disclosing information about the individuals who benefit from the trust or control its operations.
6. Foreign-Owned Companies Registered in the U.S.Foreign-owned companies that have registered to do business in the U.S. are subject to the same BOI reporting requirements as domestic companies. This includes foreign corporations, LLCs, and partnerships.

For more detailed information about which entities are required to file BOI reports, visit our BOI Filing Requirements page.

Understanding Beneficial Ownership

A key aspect of BOI reporting is identifying the individuals who qualify as beneficial owners of the company. Under FinCEN’s regulations, a beneficial owner is defined as any individual who:

• Directly or indirectly owns 25% or more of the company’s equity or membership interests.
• Exercises significant control over the company, such as through voting rights, management roles, or other decision-making authority.

It’s important to note that beneficial ownership is not limited to shareholders or members of the company. Individuals who exercise significant control—such as managing directors, executives, or other officers—must also be included in BOI reports, even if they do not own 25% or more of the company.

At Henry Kulik CPA and Ash CPA, we work with businesses to identify all individuals who qualify as beneficial owners and ensure that their information is accurately reported. Learn more about our services on our Beneficial Ownership Identification page.

BOI Filing Deadlines for Different Entities

The deadlines for BOI reporting depend on whether the business is newly formed or already in existence. Understanding these deadlines is essential for staying compliant and avoiding penalties.

1. New Businesses (Formed On or After January 1, 2024)Businesses that are formed on or after January 1, 2024, must submit their BOI reports to FinCEN within 90 days of formation. This includes new corporations, LLCs, LLPs, and foreign-owned companies that register to do business in the U.S.
2. Existing Businesses (Formed Before January 1, 2024)Existing businesses that were formed before January 1, 2024, have until January 1, 2025, to submit their initial BOI reports. This extended deadline gives existing businesses more time to gather the necessary information and comply with the new regulations.

Consequences of Failing to File BOI Reports

Failing to comply with BOI reporting requirements can result in severe penalties, including daily fines for each day the violation remains unresolved. Under FinCEN’s regulations, businesses that fail to file their BOI reports on time may face the following consequences:

1. Daily PenaltiesBusinesses that miss their BOI reporting deadlines are subject to civil penalties of $591 per day for each day the violation persists. These fines can add up quickly, particularly for businesses that are unaware of their reporting obligations.
2. Increased Regulatory ScrutinyBusinesses that fail to comply with BOI regulations may face increased scrutiny from regulatory authorities, including FinCEN. This can lead to further investigations into the company’s operations and ownership structure.
3. Reputational DamageNon-compliance with BOI regulations can harm a company’s reputation, making it difficult to build trust with clients, investors, and business partners. Maintaining transparency through accurate and timely BOI reporting is essential for fostering trust and credibility in the marketplace.

At Henry Kulik CPA and Ash CPA, we provide comprehensive services to help businesses avoid the penalties associated with BOI non-compliance.

Exemptions to BOI Reporting Requirements

While the scope of BOI reporting is broad, there are some exemptions to the filing requirements. Certain types of entities are not required to submit BOI reports, including:

1. Publicly Traded CompaniesCompanies that are publicly traded on U.S. stock exchanges and subject to SEC reporting requirements are exempt from BOI reporting, as their ownership information is already publicly available.
2. Certain Governmental EntitiesGovernmental entities and agencies are not required to file BOI reports.
3. Large Operating CompaniesLarge operating companies that meet specific criteria, such as having more than 20 full-time employees, more than $5 million in annual revenue, and a physical presence in the U.S., may also be exempt from BOI reporting.

How We Can Help with BOI Compliance

Ensuring that your business complies with FinCEN’s BOI reporting requirements is critical for avoiding penalties and maintaining transparency. At Henry Kulik CPA and Ash CPA, we offer comprehensive BOI compliance services, including:

• Identification of Beneficial Owners: We help businesses identify all individuals who qualify as beneficial owners under FinCEN’s regulations.
• Accurate and Timely BOI Filings: We assist with the preparation and submission of BOI reports, ensuring that all required information is included and submitted on time.
• Ongoing Compliance Monitoring: We provide ongoing monitoring to ensure that any changes in ownership or control are reported promptly.

For more information on how we can help your business stay compliant, visit our BOI Services page.

Conclusion

As BOI reporting regulations expand, more and more types of entities are required to file reports with FinCEN. Ensuring that your business meets these reporting requirements is essential for avoiding penalties and maintaining transparency with regulators and stakeholders.

At Henry Kulik CPA and Ash CPA, we provide expert guidance to help businesses navigate the complexities of BOI compliance. Whether you operate a corporation, LLC, partnership, or foreign-owned company, we have the expertise to ensure that your BOI reports are accurate, timely, and compliant.