In an effort to prevent fraudulent business activity, the U.S. government passed the Corporate Transparency Act in 2021, which will require some U.S. businesses to file a Beneficial Ownership Information (BOI) report with the U.S. Department of Treasury Financial Crimes Enforcement Network (FinCEN). If you are a business owner, here’s what you need to know.

This new reporting requirement is intended to combat the issue of individuals using business ownership to engage in tax fraud, money laundering, terrorism financing, and other illegal activities. The BOI report provides information about who owns or controls U.S. companies. Businesses are only required to submit a BOI report once, and then update or correct information as needed. FinCEN began accepting reports on January 1, 2024, and most businesses have until January 1, 2025 to file their BOI (businesses created after January 2024 have 90 days from their company’s registration to file). Filing a BOI is a fairly simple process, and there is no charge to file.

Who needs to complete a Beneficial Ownership Report?

Corporations, limited liability companies (LLCs), foreign companies registered to do business in any U.S. state, Indian tribes, and any other entities that filed through a secretary of state or similar office will be required to report to FinCEN. There are some entities that are exempt, including publicly traded companies, government entities, banks and credit unions, nonprofits, and certain large operating companies. (For a full list of exempt companies, see the compliance guide here.)

What information needs to be reported?

The Beneficial Ownership Report requires you to identify any individual(s) who either owns or controls at least 25 percent of the ownership interests of the company or exercises substantial control over the company. Companies can have multiple beneficial owners, and all must be included in the reporting. In addition to general company information, the report requires beneficial owners’ legal names, dates of birth, and addresses. The report also requires the number, issuing jurisdiction, and an image from either a passport, driver’s license, or other ID document issued by a state, local government, or tribe.

What if I need to make a correction?

Businesses have 30 days to file any updates or corrections to their BOI. This would include any changes to who qualifies as a beneficial owner and/or changes to their personal information.

Learn more about how to file at https://www.fincen.gov/boi. You can find a compliance guide for small businesses with full details about filing at https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide.v1.1-FINAL.pdf