The Beneficial Ownership Information Report (BOIR) is a critical compliance document that businesses in the United States must file to provide transparency about their ownership structures. This report, mandated under the Corporate Transparency Act (CTA), helps prevent illicit financial activities such as money laundering and terrorist financing by ensuring that the actual owners behind businesses are identified. Filing the BOIR correctly is essential to avoid penalties and to ensure that your business complies with federal regulations.
This blog post will guide you through the key information that must be reported in the BOIR.
1. Business Identity Information
Before diving into the ownership details, the BOIR requires basic information about the business itself:
- Legal Business Name: The official name of your business as registered with the state.
- Doing Business As (DBA) Name: If applicable, provide the name your business uses in day-to-day operations, different from the legal business name.
- Business Structure: Specify whether your business is a corporation, LLC, partnership, or other structure.
- Physical Address: The business’s primary physical location. This is crucial for establishing your business’s geographic jurisdiction.
- Taxpayer Identification Number (TIN): This could be your Employer Identification Number (EIN), which is used by the IRS to identify your business for tax purposes.
These details are essential for linking the business to the reported ownership information and ensuring the accuracy of the filing.
2. Beneficial Owner Information
The heart of the BOIR lies in identifying and reporting beneficial owners. A beneficial owner is any individual who, directly or indirectly, owns or controls 25% or more of the company. This ownership stake can be through various means, such as voting shares, partnership interests, or other direct or indirect ownership mechanisms.
For each beneficial owner, you must provide:
- Full Legal Name: The complete, legal name of the beneficial owner as listed on official identification.
- Date of Birth: This ensures that the correct individual is identified.
- Residential Address: The residential address of the beneficial owner is required to verify their identity.
- Unique Identification Number (ID): This could be a passport number, driver’s license number, or other government-issued ID. The purpose of this is to confirm the individual’s identity and ensure that they are not engaged in illegal activities under a false name.
- Ownership Details: Specific percentage of ownership and how this ownership is structured (e.g., through stock, membership interests, etc.).
This section of the report is fundamental to the Corporate Transparency Act’s goal of providing transparency into who controls a company.
3. Company Applicant Information
In addition to the owners, the BOIR requires information on the individual who files the report. This person, known as the company applicant, is the one who submits the information on behalf of the business entity. The applicant could be a business representative, such as a lawyer, or the owner themselves.
For the company applicant, the following details must be provided:
- Full Legal Name: The applicant’s full name, as it appears on their legal identification.
- Date of Birth: To distinguish between individuals with similar names.
- Residential Address: This provides an official address where the applicant can be contacted.
- Unique Identification Number (ID): As with the beneficial owner, the company applicant must provide a government-issued ID number.
While the company applicant might not own the business, their role in submitting the BOIR is essential for ensuring that the filing is completed properly.
4. Changes to Reported Information
It’s important to note that if there are any changes to the beneficial ownership of your business, the BOIR must be updated accordingly. This includes changes like:
- New Beneficial Owners: If a new individual or entity gains a 25% or greater ownership stake in the company, you must update the report to reflect this.
- Change in Ownership Percentages: If the ownership stakes of any beneficial owners change, this must be reported.
- Changes in Personal Information: If any beneficial owners or company applicants change their name, date of birth, or residential address, the information must be updated in the BOIR.
Updating your BOIR ensures that your business remains compliant with the law and avoids penalties that could arise from submitting outdated or incorrect information.
5. Exemptions from Reporting
While the BOIR aims to cover most businesses, there are some exemptions to the reporting requirements. Certain entities, such as large, well-established companies, may be exempt from filing the BOIR if they meet specific criteria. These exemptions generally apply to businesses that:
- Have more than 20 employees,
- Report substantial annual revenue (often over $5 million),
- Have an operating presence in the U.S., and
- Are already heavily regulated (e.g., banks, insurance companies, registered investment companies).
If your company meets these criteria, you may not be required to file the BOIR, but it’s important to consult a legal professional to determine if your business qualifies for an exemption.
6. Filing Deadlines and Penalties
The BOIR must be filed within 30 days of the formation of your business. This ensures that the beneficial ownership information is recorded early in the life of the business. In the case of any changes to beneficial ownership, you must update the report within 30 days of the change.
Failure to file the BOIR or submit inaccurate information could result in substantial fines or penalties, including up to $500 per day for each day that the report is late, with a maximum fine of $10,000.
Conclusion
The BOIR is an essential part of U.S. corporate compliance, designed to provide transparency about business ownership. By reporting the required information accurately, you help ensure that your business is compliant with the Corporate Transparency Act, avoiding costly penalties and supporting the fight against financial crimes.
To ensure your business is compliant with the BOIR requirements, make sure to accurately report the necessary information about the company, its beneficial owners, and company applicants. Regularly check for any updates or changes to the filing requirements to maintain compliance and avoid any legal issues in the future.