Navigating the sometimes confusing landscape of business regulations is crucial for compliance and operational success. Among these regulations, the requirement to file a Beneficial Ownership Information (BOI) report stands out. As of January 1, 2024, this new report was instituted to help ensure transparency and accountability within the business world. But which businesses are mandated to submit a BOI report?

Businesses Required to File a BOI Report

1. Corporations
   Corporations, especially privately held ones, are typically required to file a BOI report. This includes both C corporations and S corporations. Since these entities can have multiple layers of ownership, the BOI report ensures that the actual individuals who ultimately control or benefit from the corporation are disclosed.
2. Limited Liability Companies (LLCs)
   LLCs are another common business structure that must submit a BOI report. The flexibility and varying ownership structures of LLCs make it imperative to disclose beneficial ownership to prevent misuse of the entity for illegal purposes.
3. Partnerships
   While not all partnerships may be required to file a BOI report, many are. This includes limited partnerships (LPs) and limited liability partnerships (LLPs). The specific requirements can depend on the jurisdiction and the nature of the partnership’s activities. Give us a call if you’re not sure whether or not your partnership is required to file!
4. Trusts
   Trusts, particularly those that engage in business activities or hold significant assets, often need to file BOI reports. The transparency in trust ownership helps in monitoring and preventing the use of trusts for concealing the identity of the true beneficial owners.
5. Non-Profit Organizations
   In certain cases, non-profit organizations are also required to file BOI reports. This is particularly true if the non-profit engages in substantial business activities or if there are concerns about the potential misuse of the non-profit structure for illicit purposes.

Exemptions and Special Cases

While the above entities are generally required to file a BOI report, there are exemptions and special cases to consider:

• Publicly Traded Companies: Companies listed on major stock exchanges are often exempt from filing BOI reports because their ownership information is already publicly available through regulatory filings.
• Government Entities: Entities wholly owned by a government (federal, state, or local) are exempt.
• Inactive Entities: Some jurisdictions may exempt entities that are inactive or in the process of dissolution, provided they meet certain criteria.
• Large companies: Businesses with more than 20 employees and grossing more than $5 million in annual revenue are also exempt.

The Importance of Compliance

As frustrating and burdensome as this new reporting requirement is to business owners, compliance is essential to avoid severe penalties. Failing to file your BOI report on time can result in significant penalties, legal repercussions, and damage to a business’s reputation.

Final Thoughts

Understanding whether or not your business is required to file a BOI report is key to maintaining compliance and avoiding potential pitfalls. Corporations, LLCs, partnerships, trusts, and even some non-profits must navigate this requirement carefully.

Have questions or need help filing? Give us a call! Our compliance specialists ensure accurate and timely BOI reporting so you can set this headache aside and get back to running your business.