Understanding The BOI Requirement For LLC, What Businesses Should Know?

If you’re managing an LLC (Limited Liability Company), you’ve likely come across the term BOI (Beneficial Ownership Information) and wondered what it means for your business. Essentially, as an LLC owner, you’re required to submit a BOI report.

Here’s a guide on what you need to know to stay compliant and ensure your business runs smoothly. Let’s break it down.

What is the BOI report for LLC?

The Beneficial Ownership Information report is a document that identifies and provides information about the individuals who own or control your LLC. The main purpose is to enhance transparency in business operations and ownership, helping to prevent financial crimes such as money laundering and fraud.

According to the Corporate Transparency Act (CTA), entities classified as “Reporting Company” must file a Beneficial Ownership Information Report (BOIR) with FinCEN. Since LLCs are classified as reporting companies, every LLC established in the United States must submit the BOIR (BOI Report) unless it qualifies for an exemption. 

 The BOI reporting reveals the people who have significant control over the LLC, including anyone with at least a 25% ownership stake or someone who holds substantial influence over decision-making processes. 

How to file a BOI report for an LLC

Step 1: Understand the Requirement

First things first, check with your state’s Secretary of State Office or local business agency to see if your LLC needs to file a BOI report. Requirements can differ quite a bit depending on where your business is located. 

Step 2: Collecting Information

If your LLC needs to file, you’ll need to collect some basic information: 

  • Your LLC’s legal name and principal business location.
  • Your Employer Identification Number (EIN) and incorporation date. 

Step 3: Complete the Form

To complete the BOI report for an LLC, the required information includes:

  • Reporting Company Information:
  • LLC Legal Name
  • Trade name
  • Primary business address
  • The jurisdiction of its formation
  • Taxpayer identification number

  • For Each Beneficial Owner:
  • Legal name
  • Date of birth
  • Residential address
  • Unique identifier from a driver’s license, passport, or state ID, along with an image of the document displaying that identifier

  • Company Applicant Information (Applicable for LLCs established on or after January 1, 2024):
  • Legal name
  • Date of birth
  • Residential address
  • Unique identifier from a driver’s license, passport, or state ID, along with an image of the document displaying that identifier

Step 4: Submit and Maintain the Records

Once the form is completed, submit it through the online portal (FinCEN). It’s good to maintain a record of the submitted BOI report.  

Who can file a BOI report for LLC?

BOI Reporting Entities Include:

  • Domestic Entities: Check if the business was established by filing paperwork with U.S. state authorities. This includes entities such as LLCs, corporations, and partnerships.
  • Foreign Entities: Determine if the businesses are set up outside the U.S. They must file paperwork with the U.S. state authorities to conduct their operations. 

If your company fits into either of these categories, it must report Beneficial Ownership Information to the FinCEN.

When to file a BOI report for LLC

The deadline for reporting BOI (Beneficial Ownership Information) reports for LLC depends on the establishment date of your company:  

  • For companies formed or registered before January 1, 2024, BOI reports must be submitted to FinCEN by January 1, 2025. 
  • For companies established or registered after January 1, 2024, the report must be filed within 90 days from the registration date. 
  • The deadline is 30 days from the registration date for companies formed or registered after January 1, 2025. 

It is essential to ensure the timely submission of the initial BOI report and any subsequent changes in business authority, ownership, or corrections. In the event of such changes, an amendment should be filed within 30 days.

Penalties for violating BOI report

Failing to file a BOI report for LLC with FinCEN can result in penalties. Potential violations can include 

  • Willfully failing to file a BOI report
  • Filing false information
  • Failing to correct or update the report

A person who violates the BOI report may be subject to civil penalties of up to $591 each day, including imprisonment of up to two years or a fine of up to $10,000. 

Wrapping up 

Understanding and complying with the BOI requirement for your LLC is crucial for maintaining transparency and avoiding legal pitfalls. By following these guidelines, you’ll be well-equipped to handle the BOI reporting requirements for your LLC, allowing you to focus on what you do best-growing your business.