The deadline for reporting Beneficial Ownership Information (BOI) is January 1, 2025. Make sure your company is in compliance!
The BOI reporting obligation arose under the Corporate Transparency Act (CTA), which was passed in 2020 as part of the National Defense Authorization Act for Fiscal Year 2021. U.S. corporations, LLCs, businesses organized under state law, and foreign businesses registered to conduct business in the United States must report Beneficial Ownership Information (BOI) about their beneficial owner through the Beneficial Ownership Information (BOI) E-Filing System.
A beneficial owner is defined as anyone who:
- Exercises substantial control over the business, or
- Owns or controls at least 25% of the ownership interests.
Companies must report the following information about each beneficial owner:
- Name;
- Date of birth;
- Address; and
- The identifying number and issuer from either a non-expired U.S. driver’s license, a non-expired U.S. passport, or a non-expired identification document issued by a State (including a U.S. territory or possession), local government, or Indian tribe. If none of those documents exist, a non-expired foreign passport can be used. An image of the document must also be submitted.
In addition, reporting companies created on or after January 1, 2024, are required to submit information about the individuals who formed the company (“company applicants”).
An exemption to the reporting requirement is available only for larger businesses. Businesses that meet all the following criteria are exempt from reporting:
- More than 20 full-time domestic employees;
- Gross domestic receipts or sales exceeding $5 million; and
- An operating presence at a physical office within the United States.
The reporting obligation will not require annual submissions. Instead, once a report is filed, it only needs to be updated if there are changes in ownership or control. Here is a breakdown of the key deadlines:
- Existing businesses: Must report by January 1, 2025.
- Businesses created in 2024: Have 90 days from their formation date to report.
- Businesses created starting in 2025: Must report within 30 days.
Failing to comply with BOI reporting can lead to severe penalties. Civil penalties can reach up to $500 for each day a violation continues, while criminal penalties may include fines up to $10,000 and potential imprisonment for up to two years. Senior officers of the company could also be held accountable for any failures in reporting.