Frequently Asked Questions

Question 1

What is beneficial ownership information reporting?

Accepted Answer

One report is required for each business entity that has formed with the Secretary of State. The report provides identifying information about the individuals who own or control a business with the federal government, satisfying legal requirements.

Question 2

How do I get a BOIR?

Accepted Answer

With LegalZoom, you’ll be notified when it’s time to file your report based on your business and your formation date. We’ll request the information needed to file, and we’ll create an accurate report that includes the identifying information about the individuals who own or control your business, or beneficial owners, satisfying the federal reporting requirement. 
Then, we’ll file the report for you before your deadline with the Financial Crimes Enforcement Network (FinCEN). You'll receive confirmation that your report was submitted, so you can rest easy knowing you've satisfied the compliance requirement.

Question 3

When is my BOIR filing deadline?

Accepted Answer

Your deadline varies depending on your date of formation, which we can help you determine. We can also help you stay on top of the process with notifications leading up to your filing deadline. 
Generally, existing companies, or business entities formed before Jan. 1, 2024, will have until Jan. 1, 2025 to file. Newly created business entities formed on or after Jan. 1, 2024 will have 90 calendar days after the date they receive actual or public notice that their formation is official. If any of the information on the report changes, the entity will have 30 days to submit a new report. 
Taking care of this requirement will help you avoid criminal and civil penalties for failing to comply, including imprisonment for up to two years, a fine of up to $10,000, and/or a fine of up to $500 per day.

Question 4

How do I determine if I'm a beneficial owner?

Accepted Answer

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.

Question 5

What is an example of a beneficial owner with substantial control?

Accepted Answer

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 must submit information about the individuals who formed the business (known as "company applicants"), even if they don't qualify as a beneficial owner.

Question 6

Who must file a BOIR?

Accepted Answer

Corporations and limited liability companies (LLC) who qualify as reporting companies will be required to file a BOIR. This means reporting identifying information about the individuals who own or control a business with the U.S. government. Failure to comply could mean serious civil and criminal penalties. 
This new requirement applies to most business entities, known as reporting companies, unless an exception applies.

Question 7

What is the Beneficial Ownership Information Reporting Rule?

Accepted Answer

This rule, under the Corporate Transparency Act, mandates the identification of individuals who benefit from a legal entity. 
The goal of this legislation 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 requirements for beneficial ownership information of business owners operating in the United States. It requires businesses to identify and document any person who holds a 25% or greater ownership interest or exercises substantial control over the company. 
Under the new rule, most reporting companies must 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.

Question 8

What information is required for beneficial ownership?

Accepted Answer

A beneficial owner is required to 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.

Question 9

What types of companies do not qualify as reporting companies and may be exempt from filing a BOIR?

Accepted Answer

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

Question 10

What companies qualify as tax-exempt and may be exempt from filing a BOIR?

Accepted Answer

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.

Question 11

What companies qualify as a large operating company and may be exempt from filing a BOIR?

Accepted Answer

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.

Question 12

What types of companies qualify as inactive entities and may be exempt from filing a BOIR?

Accepted Answer

A reporting company must be an active business, and inactive entities are not required 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.

Question 13

What types of individuals are exempt from being listed as a beneficial owner according to the Corporate Transparency Act?

Accepted Answer

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

Question 14

What are the changes for LLCs in 2024?

Accepted Answer

Members, or owners, of a limited liability company (LLC) are likely designated beneficial owners under the beneficial owner definition of the rule. This qualifies these LLCs as reporting companies that need to file the new report with the federal agency and provide basic contact information about the company and its owners. 
This requirement applies to single-member and multi-member LLCs, all of which are considered reporting companies, and therefore also would need to identify beneficial ownership information in the BOIR.

Question 15

What if there are changes to my business after filing a BOIR?

Accepted Answer

Any changes to the owners or controlling members of a business, or their identifying information, require updated beneficial ownership information reporting. For example, an updated BOIR is required 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 is also required if initially reported information is incorrect or if entities make certain amendments. Businesses have 30 days from the date of the change or amendment to file an updated BOIR.

Question 16

Why should a business use a service to submit the Beneficial Ownership Information Report?

Accepted Answer

The Corporate Transparency Act is one of the most important legislations to impact small businesses owners. Its latest requirement—the Beneficial Ownership Information Reporting Rule—is effective Jan. 1, 2024 and mandates that most limited liability companies and corporations must 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. Failure to comply can result in serious criminal and civil penalties, which include imprisonment for up to two years, a fine of up to $10,000, and/or a fine of up to $500 per day. 
A service like the one provided by LegalZoom makes it easier for customers to meet this requirement as soon as possible and stay in compliance with federal law. 
With LegalZoom, you can avoid noncompliance with three easy steps, reducing your risk while saving time and money. Just start by answering a few simple questions about the individuals who own or control their business so the report is personalized and accurate. 
 
Based on your info, we'll create a custom report that satisfies the beneficial ownership information reporting requirement, 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.

Question 17

What is LegalZoom's Compliance Filings package?

Accepted Answer

Keeping your business compliant is critical to maintaining your good standing status and avoiding penalties, fines, and imprisonment. With Compliance Filings, you’ll satisfy the new beneficial ownership information reporting requirement and additional 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. 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. 
Updated Beneficial Ownership Information Reports: Additional filings for any changes to identifying information.

Question 18

What is LegalZoom's Compliance Filings plus Licenses & Permits package?

Accepted Answer

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 the new beneficial ownership information reporting requirement and all the additional compliance filing requirements offered in our Compliance Filings package. Plus, we’ll help you secure your required business licenses and permits:  
Custom summary 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