Beneficial Ownership Information Report

The report provides identifying details about the individuals who own or control a business to the federal government. The Beneficial Ownership Information Reporting Rule took effect on January 1, 2024. However, on December 3, 2024, a federal court issued a preliminary ruling stating that the requirement and its associated penalties are temporarily unenforceable. The federal government has appealed this decision. Despite this, FinCEN continues to accept filings, and businesses are still able to submit their BOIR, which we can assist with.

With GetGoLegal, we can assist you in filing a personalized and accurate report. We’ll gather the necessary information, then create a report detailing the identifying information of the individuals who own or control your business, or the beneficial owners.

Afterward, we’ll submit the report to the Financial Crimes Enforcement Network (FinCEN) on your behalf. You’ll receive confirmation that your report has been filed, giving you peace of mind knowing you’ve completed this task.

A beneficial owner is someone who directly or indirectly: (1) owns or controls at least 25% of your company’s ownership interests, or (2) has significant control over your business. If you’re unsure, you can always consult with an attorney from our legal network.

Examples of beneficial ownership and individuals with substantial control include:

– A key decision-maker for the reporting company
– A senior officer (such as president, CEO, CFO, general counsel, COO, or any other officer with a similar role)
– An individual with the power to appoint or remove officers or directors (or members of a similar governing body) of the company

Additionally, if your business was officially formed on or after January 1, 2024, you can submit information about the individuals who founded the company (referred to as “company applicants”), even if they do not qualify as beneficial owners.

Corporations and limited liability companies (LLCs) that qualify as reporting companies are required to file a BOIR. This involves submitting identifying information about the individuals who own or control the business to the U.S. government. This requirement applies to most business entities, referred to as reporting companies, unless an exception applies.

This regulation, part of the Corporate Transparency Act, requires the identification of individuals who benefit from a legal entity.

The purpose of this regulation is to increase transparency around business ownership structures. It aims to assist the federal government in combating financial crimes and fraud, including money laundering, corruption, human trafficking, drug trafficking, tax evasion, and fraud affecting employees, customers, and other businesses.

The Corporate Transparency Act is legislation that alters the reporting requirements for beneficial ownership information for business owners operating in the United States. It mandates businesses to identify and document anyone who holds at least a 25% ownership interest or exercises substantial control over the company.

Under this new regulation, reporting companies must submit information about each beneficial owner to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN). FinCEN has created a database to store the information of each beneficial owner reported by a company.

FinCEN requires businesses to provide their legal name, date of birth, address, and a copy of an acceptable identification document (such as a passport or driver’s license). Additionally, businesses must include the issuing jurisdiction and the document’s ID number.

FinCEN identifies 23 types of exempt business entities that are not required to report as reporting companies:

– Securities reporting issuer
– Governmental authority
– Bank
– Credit union
– Depository institution holding company
– Money services business
– Broker or dealer in securities
– Securities exchange or clearing agency
– Other Exchange Act registered entity
– Investment company or investment adviser
– Venture capital fund adviser
– Insurance company
– State-licensed insurance producer
– Commodity Exchange Act registered entity
– Accounting firm
– Public utility
– Financial market utility
– Pooled investment vehicle
– Tax-exempt entities
– Entity assisting a tax-exempt entity
– Large operating company
– Subsidiary of certain exempt entities
– Inactive entity

Companies qualify as tax-exempt entities if they meet any of the following criteria:

– The IRS recognizes them as exempt under section 501(c) of the Internal Revenue Code (which includes many nonprofit organizations).
– They lost their tax-exempt status under the code within the last 180 days.
– They are political organizations as defined under section 527(a) of the code.
– They are trusts as defined under section 4947(a) of the code.

The agency defines a large operating company as meeting all of the following criteria:

– It is subject to a federal regulatory regime.
– It employs more than 20 full-time employees in the U.S.
– It reported more than $5 million in gross receipts or sales on its most recent tax return filed with the IRS, excluding foreign receipts.
– It has a physical operating presence in the U.S.
– It is owned by an entity already exempt under the Corporate Transparency Act.
– It is designated as exempt by the Secretary of the Treasury and the U.S. Attorney General.

A reporting company must be an active business, and inactive entities are not required to report. FinCEN defines an inactive entity as meeting all of the following criteria:

– It was formed before January 1, 2020.
– It is not involved in active business operations.
– It is not owned by a foreign individual, resident, domestic partnership, corporation, or other estate or trust.
– It has not transacted over $1,000 in business during the past year.
– It holds no assets, including ownership of other companies, either in the U.S. or abroad.

The Act exempts certain individuals from the definition of a beneficial owner, including:

– Minors
– Individuals acting as nominees, intermediaries, custodians, or agents on behalf of another person
– Employees who are not senior officers and whose interest or control is solely due to their employment status
– Individuals whose only interest in a reporting company comes from inheritance rights
– Contingent trust beneficiaries
– Creditors whose interest is limited to recovering business debts

Members or owners of a limited liability company (LLC) are typically classified as beneficial owners under the beneficial ownership definition. This designates these LLCs as reporting companies, which must file the new report with the federal agency and provide basic contact information about the company and its owners.

This requirement applies to both single-member and multi-member LLCs, all of which are considered reporting companies and must include beneficial ownership information in the BOIR.

Updated beneficial ownership information reports can be submitted to reflect any changes in the owners or controlling members of a business, or their identifying information. For instance, an updated BOIR may be filed when a controlling member who was a minor reaches the age of majority. Another example is when a company becomes tax-exempt. Additionally, an updated BOIR can be submitted if the initially reported information is incorrect or if the business makes certain amendments.

The Corporate Transparency Act is one of the most complex pieces of legislation affecting small business owners. Its latest regulation—the Beneficial Ownership Information Reporting Rule—takes effect on January 1, 2024, and requires most limited liability companies and corporations to file a beneficial ownership report.

For small business owners focused on running and growing their business, navigating this new law can be overwhelming. This is especially true after the recent ruling on December 3, 2024, when a federal court issued a preliminary decision that the requirement and its penalties are temporarily unenforceable. The federal government has appealed this decision. Nevertheless, FinCEN is still accepting filings, and businesses can continue submitting their BOIR, a process we can assist with.

A service like LegalZoom simplifies the process, helping customers stay on top of legal requirements and check this task off their to-do list so they can return to focusing on their business.

With LegalZoom, completing this process is easy and efficient, saving you both time and money. Simply start by answering a few questions about the individuals who own or control your business to ensure the report is personalized and accurate.

Using the information you provide, we’ll create a custom report and file it directly with FinCEN. Once submitted, we’ll send you confirmation that the report has been filed.

Maintaining compliance is essential for keeping your business in good standing and avoiding penalties, fines, or legal issues. With Compliance Filings, you’ll meet ongoing compliance requirements:

– Annual reports: We guide you through the setup and completion of official filings to keep your business details—such as its name, address, managers, and other key information—up-to-date with the state. Filing requirements may vary by state.

– Personalized alerts: Receive notifications about your specific filing requirements and deadlines, making business compliance easier to manage.

– Amendments: File up to two official changes each year with the Secretary of State, including updates like a new name, address, or ownership structure.

– Beneficial Ownership Information Reports: Submit initial and updated filings for any changes to your business’s identifying information.

– Plus, get access to personalized compliance support from our expert specialists.

Maintaining compliance is crucial for keeping your business in good standing and avoiding penalties, fines, or legal consequences. With Compliance Filings plus Licenses & Permits, you’ll meet all the ongoing filing requirements included in our Compliance Filings package, while also securing the necessary licenses and permits for your business:

– A customized report outlining all required federal, state, and local licenses and permits
– Direct access to all necessary applications, streamlining and speeding up the process for you
– The ability to upload, view, and download business licenses from your LegalZoom account
– Notifications about upcoming expiration dates and new license requirements
– Personalized compliance and licensing support from our expert specialists