Beneficial Ownership Interest Reporting

If your company reported $5 million in revenue or less for 2023 or more than $5 million in revenue but has fewer than 20 full-time employees, please read further. Beginning on January 1, 2024, private companies are required to report information about the individuals who ultimately own or control the company to the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Department of the Treasury. The information will be maintained in a secure database accessible to federal agencies engaged in national security, intelligence, law enforcement, and other authorities meeting specific criteria.

 A beneficial owner is any individual who, directly or indirectly, exercises “substantial control” over a reporting company OR owns or controls at least 25% of the ownership interests of a reporting company. There is no maximum number of beneficial owners that must be reported. FinCEN expects that every reporting entity will be able to identify and report at least one beneficial owner. The BOI Small Company Compliance Guide provides examples of those that might exercise substantial control: senior officers such as the president, CFO, General Counsel, CEO, COO, or any other officer, regardless of title, who performs a similar function.

https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide.v1.1-FINAL.pdf

 What information must a company report?

The reporting company will fill out a form on the FinCEN website ( https://www.fincen.gov/  ) with its full legal name, any trade name or DBA name, a complete current US address, state, tribal or foreign jurisdiction of formation, and IRS taxpayer identification number before December 31, 2024.

 For each beneficial owner: full legal name, date of birth, complete current street address, unique identifying number, and image of either a US passport, state’s driver’s license, or identifying document issued by a state or local government.

  Company Applicants

A reporting company created on or after January 1, 2024, must identify and report to FinCEN at least one and, at most, two company applicants who must be individuals.  There are two categories: “direct filer” and “directs or controls the filing action.”  A direct filer is an individual who directly filed the document that created a domestic reporting company.  See page 34 of the Guide. The report must be filed within 90 calendar days after receiving notice of receiving notice that its registration is effective.

 Company applicant information is not reported for companies formed before January 1, 2024.

 The penalties for non-compliance are $591(adjusted for inflation) a day up to $10,000 and/or two years in jail.