Catchy title, right? Nonetheless, the information below is important, because it outlines mandatory reporting requirements for an estimated 32 million U.S.-registered business entities, both domestic and foreign. And noncompliance carries heavy fines – $500 a day up to a $10,000 maximum for each offense. So, apologies if this attempt to summarize the “Beneficial Ownership Information Report” or “BOIR” requirements is a bit dense, but synthesizing and infusing intrigue and humor into an overview of any government act is akin to mating a unicorn and dodo bird. Impossible.
The Backstory
On September 22, 2022, the Financial Crimes Enforcement Network (FinCEN) issued a final rule implementing the bipartisan Corporate Transparency Act’s (CTA) beneficial ownership information reporting (BOIR) provisions. FinCEN touted the passing of the CTA as enhancing:
“the ability of FinCEN and other agencies to protect U.S. national security and the U.S. financial system from illicit use and provide essential information to national security, intelligence, and law enforcement agencies; state, local, and Tribal officials; and financial institutions to help prevent drug traffickers, fraudsters, corrupt actors such as oligarchs, and proliferators from laundering or hiding money and other assets in the United States.”1
Agreed that preventing bad actors from laundering or hiding money and other assets in the United States is a good thing. But the reality is that complying with the CTA does place a burden on small- and medium-sized business. That is simply a fact. Large businesses, as defined in the CTA, are exempt.
Does the BOIR Requirement Apply to Me?
A valid question: read on to find out if you can click through to the next article and bypass the rest of this essay.
Threshold Reporting Company Requirement: The requirement to file a BOIR only applies to a “Reporting Company.” As a general rule, an entity is a Reporting Company if the entity was created by filing a formation document with a State agency – e.g., Secretary of State, Division of Corporations, etc. A “State” is defined as any state of the U.S., District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of Northern Mariana Islands, American Samoa, Guam, the United States Virgin Islands and other U.S. commonwealths, territories or possessions, as well as tribal authorities. A Reporting Company also includes non-U.S. entities (entities formed outside the U.S. and its territories) who have authority to do business within the U.S.
Some examples of formation documents are Articles of Organization (limited liability companies, limited cooperative associations, etc.); Articles of Incorporation (corporations, public benefit corporations (B Corps), cooperatives, cooperative associations, etc.); and Certificates of Partnership (limited liability limited partnerships, limited liability partnerships, general partnerships, etc.). Foreign entities typically must file Certificates or Statements of Authority.
My Entity is a Reporting Company, But Is It Exempt? (Fingers crossed…)
Unfortunately, there are only 23 Reporting Company exceptions.
1. Securities reporting issuer
2. Governmental authority
3. Bank
4. Credit union
5. Depository institution holding company
6. Money services business
7. Broker or dealer in securities
8. Securities exchange or clearing agency
9. Other Exchange Act registered entity
10. Investment company or investment adviser
11. Venture capital fund adviser
12. Insurance company
13. State-licensed insurance producer
14. Commodity Exchange Act registered entity
15. Accounting firm
16. Public utility
17. Financial market utility
18. Pooled investment vehicle
19. Tax-exempt entity
20. Entity assisting a tax-exempt entity
21. Large operating company
22. Subsidiary of certain exempt entities
23. Inactive entity
DO NOT assume that your entity falls within one of the above exemptions by simply looking at the exemption category.
And keep in mind that the entity – not the owners – must fall within one of the above exemptions. For example, I have several financial representative clients who have established entities to receive commissions, but although the individual advisors are registered with the Securities and Exchange Commission (SEC), their entities are not. Therefore, their entities are not exempt from the CTA. Similarly, I have insurance agent clients who hold individual state insurance licenses, but their entities do not, and therefore, their entities are not exempt and must file a BOIR. This is an important nuance that many professional advisors do not grasp when providing guidance to their clients.
Also do not assume that because you are not actively conducting business that your entity meets the “inactive entity” exemption. This exemption only applies if your company:
- was in existence on or before January 1, 2020; AND
- is not engaged in active business; AND
- is not owned by a foreign person, whether directly or indirectly, wholly or partially; AND
- has not experienced any change in ownership in the preceding twelve-month period; AND
- has not sent or received any funds in an amount greater than $1,000, either directly or through any financial account in which the entity or any affiliate of the entity had an interest, in the preceding twelve-month period; AND
- does not otherwise hold any kind or type of assets (money, investments, debt instruments, real property, tangible property, service contracts, etc.), whether in the United States or abroad, including any ownership interest in any corporation, limited liability company or other similar entity.
If you have any questions about whether your entity is exempt, check out both FinCEN’s BOIR Small Business Resources webpage: https://www.fincen.gov/boi/small-business-resources. Both the “SmallEntity Compliance Guide” and Frequently Asked Questions are very helpful. And, if you have any doubts whether an exemption applies, simply file the BOIR. Guessing wrong may be very costly.
My Entity is Not Exempt (Please keep reading…)
The good news is that filing an initial BOIR is a one-time deal. Although there is no annual filing
requirement, once your initial BOI Report is filed, you are required to file an updated BOI Report within
thirty (30) days of any change to the Reporting Company or Beneficial Ownership information. The
relevant deadlines are as follows.

What is a “Beneficial Owner?”
Arguably, determining who is a Beneficial Owner is the most complex issue relating to preparing and filing the BOI Report. It is also the most important reporting requirement.
The use of the term “Beneficial Owner” is both confusing and misleading, because it immediately implies actual ownership – e.g., stockholder, member or partner. But a “Beneficial Owner” does not necessarily mean ownership; it actually means “control.”
FinCEN is interested in who controls or has substantial influence within the entity. So, a “Beneficial Owner” is defined as any individual who directly or indirectly exercises substantial control over a Reporting Company OR owns or controls ≥ 25% of the Reporting Company’s ownership interests. And because all reported Beneficial Owners must be individuals – even if your entity is owned by another entity or trust – you are required to disclose the individual Beneficial Owners who ultimately own and/or control the top-level entity and/or trust. You must keep working your way up the structure until you reach one or more individual Beneficial Owners. It is not possible to conceal the Beneficial Owners by way of a multi-company/trust structure.
Substantial Control Means What?
An individual who exercises substantial control over the Reporting Company’s affairs, even if that person is not a shareholder, member, partner, etc., is considered a Beneficial Owner. An individual exercises substantial control over a Reporting Company if the individual meets any of these four general criteria.
The individual:
- is a senior officer; OR [A senior officer is any individual holding the position of a president, chief financial officer, general counsel, chief executive officer, chief operating officer or any other position/title that has a similar function as these officers. A limited liability company manager and a general partner would be considered senior officers.]
- has authority to appoint or remove certain officers (including managers) or a majority of directors of the Reporting Company; OR
- is an important decision maker; OR
- [An important decision maker is one who controls:
- The nature, scope and attributes of the entity; the selection/termination of business lines or ventures, or geographic focus; or the entering into/termination of significant contracts.
- Sales, leases, mortgages or other principal asset transfers; major expenditures/investments, issuances of equity, incurrence of significant debt or operating budget approval.
- Reorganizations, dissolutions or mergers; amendments of any substantial governance documents, including articles, bylaws, operating agreements or significant policies and procedures.]
- [An important decision maker is one who controls:
- has any other form of substantial control over the reporting company. This is a very broad, catch-all category.
Trusts
If a trust owns a Reporting Company, then the following individuals are deemed to have an ownership interest in the Reporting Company:
- A settlor who has the right to revoke the trust or otherwise withdraw the trust’s assets; OR
- A beneficiary who is the sole permissible recipient of the trust’s income and principal: OR
- A beneficiary who has the right to demand a distribution of or withdraw substantially all the trust’s assets; OR
- A trustee of the trust; OR
- Any other individual who has the authority to dispose of trust assets.
In addition, depending on the Trust Agreement, trust protectors, trust distribution or investment advisors, and/or trust beneficiaries are also Beneficial Owners.
Beneficial Owner Exemptions
There are five (5) Beneficial Owner exemptions, so the following individuals do not need to be reported as Beneficial Owners even if they meet the Substantial Control or Ownership Interest definitions.
- Minor children.
- Beneficial owners’ nominee, intermediary, custodian OR agent. Individuals who perform ordinary advisory or other contractual services (such as tax professionals and attorneys) likely qualify for this exception. In scenarios where this exception applies, the actual Beneficial Owner(s) must still be reported.
- Employees. An individual is considered an “employee” when all three of the following criteria apply.
- The individual is subject to the will and control of the employer in what and how to do work, and that the employer may discharge the individual from work; AND
- The individual’s substantial control over, or economic benefits from, the reporting company are derived solely from the employment status of the individual as an employee; AND
- The individual is not a senior officer of the Reporting Company.4. Heirs. The individual’s only interest in the Reporting Company is a future interest through a right of inheritance, such as through a will providing a future interest in a Reporting Company.
- Creditors.
Company Applicants
In addition to reporting Beneficial Owners, “Company Applicants” must be reported if your entity was formed on or after January 1, 2024.
A “Company Applicant” is either a:
- “direct filer” or the individual who physically filed the formation document with the State (e.g., founder, secretary, attorney, CPA, etc.); AND/OR
- “indirect filer” or the individual who directed the filing of the formation document (e.g., founder, organizer, incorporator, etc.).
If your entity was formed on or after January 1, 2024, you must report at least one Company Applicant – the “direct filer” – and the “direct filer” and “indirect filer” may be the same person.
Filing a BOIR
If you have determined that you must file a BOIR, it is possible to prepare and submit your own BOI Reports on the FinCEN website: https://boiefiling.fincen.gov/fileboir. You are under no requirement to use a third-party – e.g., attorney, CPA, reporting company, etc. However, the most important thing is that you file an accurate BOIR by the respective deadline.
If after reading this article, you are not comfortable determining if your entity is a Reporting Company, identifying the Beneficial Owners and Company Applicants, and filing the BOIR, please reach out to your trusted advisor – attorney or CPA – for help before the respective deadline.
The penalties for providing late, incomplete, inaccurate, false or fraudulent information include an up to a $500.00 per day fine ($10,000.00 max), as well as 2 years imprisonment.
Happy Filing!

Danette L. R. Lilja is an attorney at law with Northvale Legal.