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Comprehensive Guide To The Beneficial Ownership Interest Report (BOI Report)

Dive deep into the requirements and obligations of BOI reporting. Learn who needs to file, what information is required, and how to ensure compliance for your company.

Written by
Benjamin Ong
Published on
February 21, 2024
Use our free BOI exemption checklist or discover the requirements and obligations of BOI reporting. Learn who needs to file and what information is required.
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Welcome to our comprehensive guide on Beneficial Ownership Information (BOI) Reporting. This article is designed to breakdown the complexities of BOI reporting requirements, providing you with a clear path to compliance. While FinCEN has published a detailed 50-page document on the subject, our goal is to offer you a concise overview with key insights, along with an interactive form to quickly assess your BOI reporting obligations.

For founders eager to begin the BOI report filing process promptly, Stellar offers services tailored to assist you. - contact us now to get started. Let's dive in!

Understanding the Beneficial Ownership Interest Report (BOI Report)

Effective January 1, 2024, companies that qualify as a reporting company are required to report information about their beneficial owners. The BOI report is not an annual requirement and is submitted once or whenever there are updates regarding the beneficial ownership of the company.

The BOI report filing is free of charge and is done electronically. Failure to update information or providing false information may result in penalties, including fines of up to USD 500 per day, imprisonment for up to two years, and/or fines of up to USD 10,000. It is the responsibility of senior officers of the company to ensure compliance.

Determining Your Company's Need to File the BOI Report

👉 Skip the reading, Use our Interactive Forms to quickly determine if your company is required to file for the BOI report.

To determine if your company needs to file for the BOI report, you must first identify if your company is:

  1. A Corporation/LLC filed with the secretary of state or any similar office under the law of a state or Indian tribe, inclusive of foreign companies registered to do business in any U.S. State.
  2. 1 of the 23 Exempted Company Types

What entities are exempted from the BOI Report?

Entities Related to Securities and Investments

  • Securities reporting issuer
  • Broker or dealer in securities
  • Investment company or investment adviser
  • Venture capital fund adviser
  • Other Exchange Act registered entity
  • Commodity Exchange Act registered entity
  • Securities exchange or clearing agency
  • Pooled investment vehicle

Entities Related to Regulations, Tax and Finance

  • Bank
  • Credit union
  • Depository institution holding company
  • Money services business
  • Governmental authority
  • Accounting firm

Entities Related to Insurance

  • Insurance company
  • State-licensed insurance producer

Entities Related to Utilities

  • Public utility
  • Financial market utility

Entities Related to Non-Profit/Tax-Exempt Entities

  • Tax-exempt entity
  • Entity assisting a tax-exempt entity
  • Subsidiary of certain exempt entities

Entities That Are Considered Large or Inactive

  • Large operating company ( Companies with over $5 million in income)
  • Inactive entity

There are 23 entity types that are exempted, with additional criteria beyond the listed entity types to determine exemption status. Our interactive form can help you easily assess if your company qualifies for an exemption from BOI reporting.

What the BOI Report Includes

The BOI report, launched by the Financial Crimes Enforcement Network (FinCEN), is a new federal filing requirement under the Corporate Transparency Act (CTA). The report requires you to file updated information about the reporting company and two categories of individuals:

  1. Beneficial Owners
  2. Company Applicants

Who Qualifies as a Beneficial Owner?

An individual qualifies as a beneficial owner if they:

  • Possess substantial control over a reporting company, such as:
    • A Senior Officer, holding position or exercising the authority of a President, CFO, GC, CEO, COO or any other officer who performs a similar function
    • An individual with the ability to appoint or remove any senior officer or a majority of the board of directors
    • An individual who has influence over important decisions regarding the business such as : Business Changes (such as Termination/Amendments of business lines), Finance Changes (such as Sales/expenditures to principal assets), Structure Changes (such as Reorganization/mergers or amendments of governance documents)

OR

  • Owns or controls at least 25% of ownership interests of a reporting company, such as:
    • Equity, Stock or Voting Rights of a C-Corp
    • Member ship units of an LLC
    • Any other form of instrument, contract, arrangement that can be used to establish ownership in the entity

Beneficial Owner Exemptions

There are 5 exemptions to the definition of a beneficial owner.

  1. Minor Child defined under the law of the State or Indian tribe
  2. Nominee, intermediary, custodian, or agent
  3. Employee
  4. Inheritor - Ownership is in a future interest through right of inheritance
  5. Creditor - An individual where the reporting company is in loan or debt to.

Calculating Beneficial Ownership %

There are 3 category formulas to calculating the ownership:

For companies issuing shares of stock, 2 calculations are required:

  • Total Combined Voting Power of Individual / Total Outstanding Voting Power of All Classes
  • Total Combined Value of the Individual’s Ownership Interests / Total Outstanding Value of all Classes of Ownership Interests

The individual’s ownership interest will be the larger of the two percentages above.

If your company issues capital or profit interests, apply the following calculation

  • Individual’s capital and profit interest / Total Outstanding Capital and Profit Interests

If your company does not apply to either of the above, simply identify any individual owning 25% or more of any class or type of ownership interest.

👉 Skip the calculation, by using Stellar App, you can find all of these information neatly documented for you and updated in real time. - Contact Us to get started.

Who Qualifies as a Company Applicant ?

A company applicant is defined as an individual who directly filed and/or controlled the filing of the formation of the entity. This is the individual who performed the electronic/physical filing of formation/incorporation with the secretary of state.

Companies or legal entities are not considered as company applicants. If there are multiple individuals involved in the filing, two company applicants must be reported.

Company Applicant Filing Exemptions

If your reporting company is formed on or after January 1 2024, you would need to file for your company applicants.

If your reporting company is formed before January 1, 2024, you do not need to file for your company applicants.

BOI Exemption Checklist

Once you have identified your beneficial owners and company applicants, you can start filing your BOI report via FinCEN. To make the process smoother, here is a checklist of information that you need to prepare.

👉 Prefer to skip the administrative? Stellar is here to help you file your BOI report and keep your records updated. Get started with us today.

Reporting Company

  • Full legal name
  • Any trade name or “doing business as” name
  • Complete Current US Address - Your principal place of business
  • State, Tribal or Foreign Jurisdiction of formation
  • Internal Revenue Service (IRS) Taxpayer Identification Number (TIN) and Employer Identification Number

Beneficial Owners and Company Applicants

  • Full legal name
  • Date of Birth
  • Complete current address - residential address (for beneficial owners) / business address (for company applicants)
  • Non-Expired Identification Document, such as :
    • U.S. Passport
    • State Driver’s License
    • Identification document issued by state, local government or tribe
    • Foreign Passport

Where to File a BOI report?

You may either go to https://boiefiling.fincen.gov/ or get in contact with Stellar to assist you in filing the report.

How Does Stellar Streamline the BOI Report?

Stellar offers a comprehensive platform that helps founders easily monitor and assess whether they need to file a Beneficial Ownership Information (BOI) report.

Simplifying BOI Report Assessment

Our Stellar Experts will guide you through a detailed series of questions to determine your reporting requirements, saving you time and ensuring compliance with the Corporate Transparency Act.

👉 Try out our free interactive form for a start

Handover The Admin Work

Once the assessment is complete, Stellar takes care of the filing process for you. Our experienced team ensures that all required information is accurately submitted to the Financial Crimes Enforcement Network (FinCEN), allowing you to focus on running your business with peace of mind.

Continuous Monitoring and Updates

At Stellar we seek to be your one-stop solution to all things corporate. As your operations manager, we will be able to help you document any beneficial owner changes and this includes filing the BOI report. Our platform will also alert you to any changes in your beneficial ownership structure or reporting requirements, helping you stay compliant.

Get Started Today

Don't let BOI reporting requirements overwhelm you. Partner with Stellar to streamline the process and ensure compliance. Get started today to experience the ease and efficiency of our service and our platform. Book a Call with us today!

Benjamin Ong
February 21, 2024
7
min read
Blog

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