The report provides identifying information about the individuals who own or control a business to the federal government. The Beneficial Ownership Information Reporting Rule went into effect Jan. 1, 2024. On December 3, 2024, a federal court made a preliminary decision that the requirement and its penalties are not enforceable for the time being. The federal government has appealed this decision. FinCEN is still accepting filings, and businesses may still submit their BOIR, which we can help file.

With LegalZoom, we can help you file a personalized and accurate report. We’ll request the information needed to file, and we’ll create a report that includes the identifying information about the individuals who own or control your business, or beneficial owners.

Then, we’ll file the report for you with the Financial Crimes Enforcement Network (FinCEN). You'll receive confirmation that your report was submitted, so you can rest easy knowing you've checked this off your list.

A beneficial owner is an individual who directly or indirectly: (1) owns or controls at least 25% of your company’s ownership interests, or (2) exercises substantial control over your business. If you're not sure, you can always talk to an attorney from our legal network.

Examples of beneficial ownership and beneficial owners with substantial control include:

- An important decision-maker for the reporting company

- A senior officer (president, chief executive officer, chief financial officer, general counsel, chief operating officer, or any other officer with a similar function)

- An individual with the authority to appoint or remove officers or directors (or similar body) of the company

Additionally, if you officially formed your business on or after Jan. 1, 2024, you may submit information about the individuals who formed the business (known as "company applicants"), even if they don't qualify as a beneficial owner.

Corporations and limited liability companies (LLC) who qualify as reporting companies may file a BOIR. This means reporting identifying information about the individuals who own or control a business with the U.S. government. This applies to most business entities, known as reporting companies, unless an exception applies.

This regulation, under the Corporate Transparency Act, requests the identification of individuals who benefit from a legal entity.

The goal of this regulation is to provide transparency around business ownership structures. It helps the federal government crack down on financial crimes and fraud, such as money laundering, corruption, human trafficking, drug trafficking, tax fraud, and fraud against employees, customers, and other businesses.

The Corporate Transparency Act is legislation that changes the reporting for beneficial ownership information of business owners operating in the United States. It requests businesses identify and document any person who holds a 25% or greater ownership interest or exercises substantial control over the company.

Under the new regulation, reporting companies file information on each beneficial owner with the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN). FinCEN has developed a database that holds information about each beneficial owner documented by a reporting company.

FinCEN requests businesses provide their legal name, date of birth, address, and an image of an acceptable identification document, such as a passport or driver's license, along with the issuing jurisdiction and the document's ID number.

FinCEN lists 23 types of exempt business entities that do not qualify as reporting companies.

- Securities reporting issuer

- Governmental authority

- Bank

- Credit union

- Depository institution holding company

- Money services business

- Broker or dealer in securities

- Securities exchange or clearing agency

- Other Exchange Act registered entity

- Investment company or investment adviser

- Venture capital fund adviser

- Insurance company

- State-licensed insurance producer

- Commodity Exchange Act registered entity

- Accounting firm

- Public utility

- Financial market utility

- Pooled investment vehicle

- Tax-exempt entities

- Entity assisting a tax-exempt entity

- Large operating company

- Subsidiary of certain exempt entities

- Inactive entity

Companies qualify as tax-exempt entities if they meet any of the following criteria:

- The IRS considers them exempt entities under section 501(c) of the Internal Revenue Code (this will include many entities with nonprofit organization status).

- They lost tax-exempt status under the code less than 180 days prior.

- They are political organizations as defined under section 527(a) of the code.

- They are trusts as defined under section 4947(a) of the code.

The agency defines a large operating company as meeting all of the following criteria:

- It is otherwise subject to a federal regulatory regime.

- It has over 20 people with full-time employment status in the U.S.

- It has more than $5 million in gross receipts or sales on a prior year's tax return filed with the IRS, excluding foreign receipts.

- It has a physical operating presence in the U.S.

- It is owned by an entity already exempt under the Corporate Transparency Act.

- It is otherwise designated as exempt by the Secretary of the Treasury and the U.S. Attorney General.

A reporting company must be an active business, and inactive entities are not encouraged to report. FinCEN defines an inactive entity as meeting all of the following criteria:

- It was created before Jan. 1, 2020.

- It is not engaged in active business.

- It is not owned by a foreign person, resident, domestic partnership, corporation, or other estate or trust.

- It has not sent or received over $1,000 while transacting business in the last year.

- It has no assets, including ownership of other companies, in the U.S. or elsewhere.

The Act exempts certain people from the beneficial owner definition, including:

- Minors

- Individuals acting as nominees, intermediaries, custodians, or agents on behalf of someone else

- Employees who are not senior officers and whose only interest or control is derived solely from their employment status

- Individuals whose only interest in a reporting company is derived solely from the right of inheritance

- Contingent trust beneficiaries

- Creditors whose only interest is to recover business debts

Members, or owners, of a limited liability company (LLC) are likely designated beneficial owners under the beneficial owner definition. This qualifies these LLCs as reporting companies that may file the new report with the federal agency and provide basic contact information about the company and its owners.

This applies to single-member and multi-member LLCs, all of which are considered reporting companies, and therefore also may identify beneficial ownership information in the BOIR.

Updated beneficial ownership information reports may be submitted for any changes to the owners or controlling members of a business, or their identifying information. For example, an updated BOIR may be submitted when a controlling member is a minor and reaches an age of majority. Another example is if a company becomes tax exempt. Additionally, an updated BOIR may also be submitted if initially reported information is incorrect or if entities make certain amendments.

The Corporate Transparency Act is one of the most complex legislations to impact small businesses owners. Its latest regulation—the Beneficial Ownership Information Reporting Rule—is effective Jan. 1, 2024 and encourages most limited liability companies and corporations to file the beneficial owner report.

Navigating the new law can be confusing and distracting for small business owners who are otherwise focused on running and growing their business. This is especially true in light of the recent ruling. On December 3, 2024, a federal court made a preliminary decision that the requirement and its penalties are not enforceable for the time being. The federal government has appealed this decision. FinCEN is still accepting filings, and businesses may still submit their BOIR, which we can help file.

A service like the one provided by LegalZoom makes it easier for customers to navigate the legal developments and check this task off their to-do list, so they can get back to focusing on their business.

With LegalZoom, you can accomplish this with three easy steps, saving time and money. Just start by answering a few simple questions about the individuals who own or control your business so the report is personalized and accurate.

Based on your info, we'll create a custom report, and file it directly with FinCEN for you. Once we file the personalized report with FinCEN, we’ll provide you with confirmation that it's been submitted.

Keeping your business compliant is critical to maintaining your good standing status and avoiding penalties, fines, and imprisonment. With Compliance Filings, you’ll satisfy ongoing compliance filing requirements:

- Annual reports: Guided setup and completion of official filings that keep your business information—including its name, address, managers, and other details—updated with the state where required. Filing requirements vary by state.

- Personalized alerts: Alerts notifying you of your specific filing requirements and due dates, simplifying business compliance.

- Amendments: File up to two official changes about your business each year with the Secretary of State, such as a new name, address, or ownership.

- Beneficial Ownership Information Reports: Initial and additional filings for any changes to identifying information.

- Plus, access to personalized compliance support from our experienced specialists.

Keeping your business compliant is critical to maintaining your good standing status and avoiding penalties, fines, and imprisonment. With Compliance Filings plus Licenses & Permits, you’ll satisfy all the ongoing compliance filing requirements offered in our Compliance Filings package. Plus, we’ll help you secure your required business licenses and permits:

- Custom report of required federal, state, and local licenses and permits

- Direct access to all of your required applications, simplifying and expediting the process for you

- Upload, view, and download business licenses from your LegalZoom account

- Notifications on upcoming expiration dates and new license requirements

- Personalized compliance & licensing support from our experienced specialists