Impact of Choice of Entity on BOI Reports
October 2024
The Corporate Transparency Act now requires many entities to file a beneficial ownership informaton report, or "BOI report," with information about their owners.
The broad language of the statute and regulations has potential for surprise results.
New Reporting Requirements for BOI Reports
Beginning January 1, 2024, many entities are now required to report information about their owners.
Each reporting company is required to file a report that identifies each beneficial owner.
“Reporting company” includes a corporation, limited liability company, or other entity (such as a limited partnership) that is created by filing a document with a secretary of state under state law.
Twenty three types of entities are exempt from reporting. This includes publicly traded companies, nonprofits, and certain large operating companies.
“Beneficial owner” includes an individual who owns or controls twenty five percent (25%) or more of ownership interests, or exercises substantial control over the entity.
BOI report.
Reporting is made to the Financial Crimes Enforcement Network, which is a bureau of Treasury and known as "FinCEN," on a BOI report filed electronically through the FinCEN website: www.fincen.gov/boi.
Three different due dates may apply. If the company is created before January 1, 2024, then the due date to report is January 1, 2025. If the company is created in 2024, then the due date to report is 90 days after confirmation of formation. If the company is created after 2024, then the due date to report is 30 days after confirmation of formation.
EXAMPLE: In 2015, A and B create a new limited partnership by filing a certificate of formation with the secretary of state. A and B are equal members, each owning fifty percent (50%) partnership interests. The partnership is a reporting company. Both A and B are beneficial owners. The due date to first report beneficial owners is January 1, 2025. In 2024, the company electronically files a BOI report with FinCEN that reports beneficial ownership of A and B.
After filing an initial report, an updated report is required within 30 days to report (1) any change to the information reported for the reporting company, such as registering a new business name; (2) a change in beneficial owners or a sale that changes who meets the ownership interest threshold of twenty five percent; or (3) any change to a beneficial owner’s name, address, or unique identifying number previously provided to FinCEN.
Choice of Entity
Depending on the entity structure selected and whether an entity falls within one of twenty three exemptions, an entity may be considered a reporting company and an individual may be considered a beneficial owner.
For a detailed discussion on BOI reports, as well as the impact of choice of entity on BOI reports, please consider the following CPE/CLE course.
Course materials include over 50 charts, which diagram commonly encountered entity structures and the corresponding reporting company and beneficial owner implications.
Example chart.
Structures involving trusts, foreign entities, and multi-tiered entities are also addressed.