Introducing BOI Reports, a New Mandatory Filing for US Founders

Introducing BOI Reports, a New Mandatory Filing for US Founders

Beginning in 2024, owners of small entities in the US are required to file a Beneficial Ownership Information (BOI) Report to the FinCEN (The Financial Crimes Enforcement Network within the Treasury Department). This filing was introduced by the Corporate Transparency Act, which became law in 2022. Fines for non-compliance are listed at $500/day.

The CTA aims to combat fraudulent financial activity such as money laundering, tax fraud, and financing for criminal organizations. Under the CTA, the BOI Report filing requires businesses to disclose information on "Beneficial Owners", such as 25%+ shareholders, officers, and directors/managers.

Does this apply to me?

 
If you are a founder or owner of an entity, the answer is almost certainly "yes". This filing requirement applies to LLCs, corporations, and even SPVs with very limited exceptions, especially for startup founders. Most exemptions are entities that are already required to disclose ownership information to another federal agency (i.e., the SEC or IRS). Here are a few of the most common exemptions:

1. Registered Investment Advisors and associated funds
2. Tax Exempt Entities and associated subsidiaries
3. Inactive Entities
4. Businesses in highly regulated industries (banks, insurance, etc.)
5. Members of the National Small Business Association (NSBA)
6. Publicly Traded Companies

For additional details, see the CTA compliance guide published by FinCEN.

How to avoid penalties and minimize fees?

Due to the complexity of the filing requirements, we would recommend working with a tech-enabled service provider like Startup Stack partner Savvi.legal. Savvi's platform and services are built to help tech-savvy founders navigate formation, compliance, and filings (including BOI Reporting) with quick turnarounds and minimal fees. See Savvi's exclusive Startup Stack discounts with up to $5K in savings (not including all the law firm fees they'll save you!)