Mastering BOI Reports: Your Ultimate Guide to Understanding Every Type
Dive into our ultimate guide to BOI reports. Understand each type, key details, and their importance for financial transparency — all explained.
Effective January 1, 2024, the Corporate Transparency Act (CTA) of 2020 mandates that all small businesses, LLCs, and corporations file a Beneficial Ownership Information (BOI) report with FinCEN. This report requires businesses to provide accurate details about their company, beneficial owner, and company applicant. Maintaining transparency in financial and business transactions is crucial. This article offers a comprehensive understanding of the various types of BOI reports, their importance, and essential information for compliance. Whether you’re a business owner, tax professional, or interested in financial regulations, this guide will help you navigate the complexities of BOI reporting.
What are the different types of BOI Reports available?
FinCEN classifies Beneficial Ownership Information (BOI) reports into four types based on the reporting company’s requirements:
- Initial BOI report
- Updated BOI report
- Corrected BOI report
- Newly exempt entity BOI report.
Now, let’s review each of these reports.
Initial BOI Report
The Initial BOI report is the first BOI report that a reporting company files. This initial report provides essential information such as company details, beneficial owner information, and company applicant information. It includes required reporting information such as name, date of birth, address, unique identifying number, and an image of an acceptable identification document.
Information reported in the initial BOI Report:
- Type of BOI filing: The company must choose the BOI reporting type as the initial report.
- Reporting company details: Name, address, tax ID number, and jurisdiction of formation or registration.
- Company applicants’ details: Individual Name, date of birth, address, form identification, issuing jurisdiction, and acceptable identification documents.
- Beneficial owner’s details: Name, date of birth, residential address, form identification, issuing jurisdiction, and acceptable identification documents.
Reporting Deadline for initial BOI report:
- A company that exists as of January 1, 2024, must file its initial BOI report by January 1, 2025.
- A company established or registered to operate in the United States between January 1, 2024, and January 1, 2025, will have a precise 90-calendar-day period after receiving actual or public notice of its effective creation or registration to file its initial BOI report. This deadline starts from the date of actual notice or the first public notice, whichever is earlier, giving you a clear timeline to follow.
- For a company established or registered after January 1, 2025, the filing deadline for the initial BOI report is shorter. You will have 30 calendar days from the actual or public notice of your effective creation or registration to file the report, ensuring you know the updated requirements.
Attention to previously exempt reporting companies: If your company previously qualified for an exemption to the definition of reporting companies but no longer qualifies, you must file a BOI report within 30 calendar days of the date your company stops qualifying for the exemption.
Attention previously exempt reporting Companies : If your company no longer qualifies for an exemption, you must file a BOI report within 30 calendar days of the change.
Updated BOI Report
An updated report is also a type of BOI report. Suppose there are any changes to the required information about your company or its beneficial owners in a BOI report that your company filed. In that case, your company must file an updated BOI report no later than 30 days after the date on which the change occurred. The same 30-day timeline applies to changes in information submitted by an individual to obtain a FinCEN identifier.
Note: A reporting company is not required to file an updated report for any changes related to the personal information about the company applicant in the previously filed BOI report.
Information that can be changed in an updated BOI Report
The following examples illustrate changes that necessitate an updated BOI report:
• Any change in the reporting company information, such as registering a new DBA.
• Changes in beneficial owners, such as a new Chief Executive Officer, a sale that changes who meets the 25 percent ownership interest threshold, or the death of a beneficial owner.
Note: When a beneficial owner dies, resulting in changes to the reporting company’s beneficial owners, report those changes within 30 days of the deceased beneficial owner’s estate being settled. The updated report should identify any new beneficial owners to the extent appropriate.
- Any change to a beneficial owner’s name, address, or unique identifying number is provided in a BOI report.
Note: If a beneficial owner obtains a new driver’s license or other identifying document that includes the changed name, address, or identifying number, the reporting company must also file an updated beneficial ownership information report with FinCEN, including an image of the new identifying document.
Important rule: When a minor beneficial owner reaches the age of majority, you must file an updated BOI report. This report should identify the individual as the beneficial owner and update any necessary information, replacing the parent or legal guardian’s details with their own.
Corrected BOI Report
When a reporting company discovers an error in a BOI report that was filed, you must correct it not later than 30 days after the date you became aware of the mistake or have reason to know about it. This includes inaccuracies in the information about your company, its beneficial owners, or its company applicants. The same 30-day timeline applies to errors in information submitted by an individual to obtain a FinCEN identifier.
Note: There are no penalties for filing an inaccurate BOI report as long as it is corrected within 90 calendar days of filing.
New Exempt Entity BOI Report
When a reporting company has filed a BOI report but later becomes exempt from filing it, the company should submit an updated report stating that it is no longer a reporting company. An updated BOI report for a newly exempt entity will only require the entity to identify itself and check a box indicating its newly exempt status.
Simplify BOI Filing for Your Business with TaxBandits
In this article, we discussed the various types of BO reports, the necessary information, and the deadline for submitting the BOI report. Companies should submit the Beneficial Ownership Information (BOI) report with the correct and required information to ensure compliance and avoid hefty penalties. TaxBandits plays a crucial role in this process!
TaxBandits offers a streamlined solution for filing BOI reports. Our user-friendly software includes advanced features that simplify the preparation and submission process. With our optimized solution, you can stay updated on the status of your BOI report in real-time, ensuring a seamless and efficient BOI filing experience.
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