The BOIR Filing Requirements for Startups

Almost any company formed in the US, or any foreign company that registers to do business in the US, needs to file this report. Let's dive into who, when, where, and what needs to be filed.

In September 2022, the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN) enacted new ownership reporting rules under the Corporate Transparency Act. Starting January 1, 2024, companies formed on or after that date have 90 days to report their ownership details to FinCEN. From 2025 onwards, any newly established company must file its report within 30 days of its formation or registration. Additionally, companies existing before December 31, 2023, have the entire year of 2024 to comply.

Beneficial Ownership Information Report ("BOIR") Requirements

Who should file BOIR?

Any company formed in the US, or any foreign company that registers to do business in the U.S. by filing a document with a secretary of state or a similar office, is required to comply with reporting requirements unless it falls under one of the specified exemptions:

A few words about the most notable exemptions:

• The “Investment Company / Adviser” exemption is limited to entities registered with the SEC (RIAs) and venture capital fund advisers.
• The “Large operating companies” include any company that employs more than 20 full-time employees in the U.S., generates more than $5M in gross receipts or sales in the U.S., and maintains an operating presence at a physical office within the U.S. Subsidiaries of large operating companies are also exempt from BOI reporting, provided that the subsidiary’s ownership interests are controlled or wholly owned by the exempt entity.

Who should be disclosed in BOIR?

1. Beneficial owners - each one of the following individuals:

(a) Individuals exercising substantial control:

      (i) Senior officers (President, CEO, CFO, COO, GC or any other officer performing similar       functions); or

      (ii) Individuals having appointment / removal authority with respect to senior officers or a .       majority of the board (similar body); or

      (iii) Important decision-makers (determination / substantial influence over decisions on       entity's business, finances, or corporate structure); or

      (iv) Individuals having any other form of substantial control;

(b) Individuals owning or controlling at least 25% of the ownership interests or voting rights (including convertibles, options, and other privileges).

Exceptions to the beneficial owners are (i) minor children, (ii) nominees, intermediaries, custodians, or agents, (iii) employees whose control is derived solely from the employment status (save for senior officers), (iv) inheritors, and (v) creditors.

2. Company applicant(s) (min. one and max. two individuals):

    (a) Direct filer (required) - individual who actually filed the certificate of incorporation (for domestic entities) / registration (for foreign entities); and

     (b) Individual directing or controlling the filing action (only if there was other individual who was in charge of incorporation / registration, even       though did not actually file documents).

If the reporting entity is created / registered to do business in the U.S. before Jan 1, 2024, such entity is NOT required to report a company applicant(s).

What information should be disclosed in BOIR?

1. For the reporting company:

(i) Full legal name;

(ii) Any trade name or “doing business as” name;

(iii) Complete current U.S. address;

(iv) Jurisdiction of formation (including (a) State/Tribal jurisdiction for a domestic reporting entity or (b) State/Tribal jurisdiction of 1st registration for a foreign reporting entity); and

(vi) IRS TIN, including a EIN (or, if a foreign reporting company has not been issued a TIN in the US, its foreign TIN and the name of the issuing jurisdiction).

2. For each beneficial owner and each company applicant required to be reported:

• (i) Full legal name;
• (ii) Date of birth;
• (iii) Complete current address;
• (iv) Unique identifying number and issuing jurisdiction from one of the following non-expired documents:
  • (a) U.S. passport;
  • (b) identification document issued by a State, local government, or Indian Tribe issued for identifying the individual;
  • (c) State-issued driver’s license; or
  • (d) if none of (a)–(c) are available, a foreign passport; and
• (v) An image of the document from which the unique identifying number was obtained.

When to file BOIR?

1. For initial reports:

    (a) If the reporting entity is registered by Jan 1, 2024, it should file an initial BOIR by the end of     2024;

    (b) If the reporting entity is created / registered to do business in the U.S. after Jan 1, 2024,     then initial filing is due within 90 days after receiving a public notice on incorporation /     registration (as applicable);

2. For amended / corrected reports: within 30 days after change has occurred / the reporting entity has become aware of the inaccuracy in a BOIR. Companies are not otherwise required to submit BOI reports on an annual or other periodic basis.

How to file BOIR?

The procedure is pretty straightforward. In order to file a BOIR on behalf of a reporting entity, one needs to:

(i) visit BOI E-Filing System;

(ii) choose one of two options:

    (a) prepare an offline PDF BOIR and submit; or

     (b) prepare a BOIR online via the system and submit.

There is no fee for submitting the BOIR to FinCen.

If you need help with this, feel free to reach out.

What are the penalties for not complying?

If someone knowingly gives false or incomplete information to FinCEN, or doesn't report the required details at all, they could face up to $10,000 in fines and two years in prison. This includes situations where someone prevents the necessary information from being reported by not providing or submitting it.

Additional sources: BOIR Requirements and Filing Instructions (attached).

DISCLAIMER

You should always consult your own lawyer. While I am a lawyer, I may not be yours (yet). Please note that the information provided here is for informational purposes only and should not be considered legal or tax advice.

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