Beneficial Ownership Reporting Rules: What You Need to Know and Do

Updated as of March 3, 2025

On Sunday evening, March 2, the U.S. Treasury announced plans to narrow beneficial ownership information (BOI) reporting rules to foreign reporting companies only, effectively ending BOI reporting requirements for U.S.-based companies.

The announcement follows months of uncertainty regarding the enforcement of the Corporate Transparency Act of 2021 (CTA) due to legal challenges that led to nationwide injunctions and subsequent reporting deadline changes.

The department plans to issue a proposed rulemaking to start the process of cementing its decision to focus enforcement of the CTA solely on foreign companies. Now and after the rulemaking takes effect, the Treasury stated it won’t impose BOI-related penalties or fines on U.S. citizens or domestic reporting companies, including their beneficial owners.

BOI reporting is a product of the CTA, a piece of legislation that seeks to enhance the U.S. government’s ability to identify money laundering, fraud, and other crimes.

Details are few at the moment. We’ll keep you informed of any further BOI news.

New BOI reporting rules have been implemented as part of ongoing efforts to combat financial crime and increase transparency in business ownership. For companies that don’t meet one of the exceptions for filing an initial BOI report, these regulations, stemming from the CTA, represent a significant change in how businesses must disclose their ownership structure.  

In this overview, we’ll explore the basics of BOI reporting, including what it is, what to do, and where to learn more. 

What is Beneficial Ownership Reporting?

Most U.S. business entities are—or soon will be—required to file initial BOI reports to the  Financial Crimes Enforcement Network, more commonly known as FinCEN. The report solicits information about beneficial owners to help the U.S. government detect instances of fraud and other financial crimes.

Beneficial Owners are defined by FinCEN as: 

“[…] an individual who either directly or indirectly: (1) exercises substantial control over a reporting company, or (2) owns or controls at least 25 percent of a reporting company’s ownership interests.” 

Businesses are required to report the identity of any individuals who meet this definition. The company must report information for each beneficial owner, including the individual’s name, date of birth, and address, along with a copy of a government-issued ID, such as a driver’s license or passport. 

A Company Applicant is the person who files paperwork to start or register a company or who oversees this process for businesses. In many cases, this would be an attorney who assisted with the company setup and registration process.

While there may be overlap, company applicants are distinct from beneficial owners, who have ongoing control or significant ownership of the company. While a company applicant is involved in setting up the business, they may not have a lasting role in running or owning it.

To comply with the new beneficial ownership reporting rules, follow these steps:

Step 1: Determine if Your Business Needs to Report

Generally, any entity registered with a state’s Secretary of State, or a foreign company registered to do business in the United States must file.  The new beneficial ownership reporting rules are primarily intended for small corporations and LLCs, so exceptions exist, mostly for larger entities.  

One of the exemptions includes entities meeting FinCEN’s criteria for a large operating company. To be considered a large operating company, businesses must meet the following requirements: 

• Over 20 full-time employees located in the United States 
• Over $5 million in gross receipts (as disclosed on the previous year’s federal income tax return) 
• Physical operating presence in the United States 

And if the company falls under any of 23 specific categories, it may also be exempt from reporting. A full list is available on the FinCEN website, but some of the most common examples of exempt organizations include:

• Banks
• Credit unions
• Insurance companies
• Tax-exempt entities
• Inactive entities
• Public Utilities
• Securities-reporting entities, including public companies

Step 2: Gather the Required Information

If your business is required to report, you will need to gather specific information for each beneficial owner. This includes:

• Name, date of birth, and address
• A copy of a government-issued identification, such as a driver’s license or passport

Businesses created in 2024 and later must also provide this information for company applicants. Entities created and registered to do business before January 1, 2024, are not required to report the company applicant. 

Step 3: File Your Report

Reports can be filed electronically through the FinCEN website.  The timing of your report depends on when your business was established:

FinCEN Beneficial Ownership Information Filing Timeline:

• Existing companies (established prior to January 1, 2024): You must file by March 21, 2025. 
• New companies (established after January 1, 2024): Your deadline is the later of March 21 or 30 calendar days after receiving confirmation from your state’s Secretary of State (or equivalent office) that the entity was registered. Entities affected by one of the many hurricanes in 2024 may qualify for a 90-day extension. 
• Ownership Changes: If your business makes substantial changes to its beneficial ownership structure, such as accepting an investment in exchange for an equity stake over 25%, you must correct your previous report within 30 days of the change occurring. 

Some businesses may have deadlines later than March 21 due to natural disaster relief.  

If you miss the deadline or submit an inaccurate report, FinCEN offers a 30-day grace period for voluntary corrections to avoid penalties. However, willful non-compliance or providing false information can result in severe consequences, including daily fines in excess of $600, substantial monetary penalties, and even criminal charges in extreme cases.  

Company officers may be held personally responsible for failing to file required reports, so timely and accurate reporting should be a priority for all businesses subject to these rules.

BOI Filing Requirements for Complex Ownership Structures

Complex structures like tiered partnerships or trusts may require professional advice. These structures can make it challenging to determine who qualifies as a beneficial owner. 

Smith + Howard can provide guidance on navigating these complexities and recommend vendors that prepare BOI reports, ensuring you identify all reportable beneficial owners and comply with FinCEN’s requirements accurately.

FinCEN BOI Reporting Additional Resources

For more detailed information, you can visit:

• FinCEN’s Beneficial Ownership Information Reporting: The official FinCEN page dedicated to beneficial ownership information reporting, providing comprehensive guidance and resources.
• FinCEN’s Beneficial Ownership Information FAQs: A comprehensive list of frequently asked questions covering various aspects of beneficial ownership reporting, including exemptions, definitions, and reporting requirements.
• FinCEN’s Beneficial Ownership Information Reporting Rule Fact Sheet: This fact sheet provides a comprehensive overview of the reporting requirements, including definitions and exemptions.

Smith + Howard: Trusted Accounting and Tax Partner

At Smith + Howard, our professionals invest significant time and resources into staying up to date on the latest laws and regulations that may impact our clients. 

If your business qualifies under the beneficial ownership reporting requirements and you need advice or assistance with the process, please contact a Smith + Howard advisor today. We’re here to help you navigate these new requirements and ensure compliance.