Demystifying BOI Filing

What Every Business Owner and Decision-Maker Needs to Know

Have you filed your BOI yet?

If not, you’ll want to read this article today to understand what the Beneficial Ownership Information (BOI) filing is, why it’s required, and how to meet the new deadlines without facing penalties.

We created this article to help business owners and decision-makers cut through the confusion surrounding the Beneficial Ownership Information (BOI) filing and navigate this new requirement with confidence. Whether you’re unsure if this applies to you, want to avoid costly mistakes, or simply need a clear explanation, this guide simplifies the process by breaking down the essentials, debunking myths, clarifying exemptions, explaining why decision-makers are included, and providing actionable steps to maintain compliance. Don’t let confusion or delays catch you off guard. Everything you need to know is right here.

What is BOI Filing?

The Beneficial Ownership Information (BOI) filing is a significant compliance requirement under the Corporate Transparency Act (CTA), taking effect in 2024. It mandates many U.S.-based businesses and certain decision-makers to report critical information to the Financial Crimes Enforcement Network (FinCEN). Designed to promote transparency and prevent illicit activities like money laundering and tax evasion, BOI filing requires businesses to disclose their beneficial owners,

• individuals who either own at least 25% of the company, OR
• exercise substantial control over its operations, even without ownership.

What Information Will Be Required?

For the Business

• Full legal name.
• Business address.
• Employer Identification Number (EIN).

For Beneficial Owners and Decision-Makers

• Full legal name.
• Residential address (not a business address).
• Date of birth.
• Government-issued identification (e.g., passport or driver’s license), with a scanned copy.

Who Owns the Information?

• Your company - Technically, the information you submit is still your company’s proprietary data.
• FinCEN - Once submitted, the data is securely stored in FinCEN's systems. FinCEN is responsible for maintaining and safeguarding the information.

How is the Information Used?

The information is used exclusively for:

• Law Enforcement and Regulatory Purposes - To prevent money laundering, terrorism financing, tax fraud, and other illicit activities.
• Authorized Agencies - It can only be accessed by certain federal, state, and tribal law enforcement and regulatory agencies.

Who Can Access the Information?

The BOI is not publicly accessible. The only parties that can access your information are:

• FinCEN - Stores and manages the information.
• Authorized Agencies - Law enforcement or financial regulators with a legitimate reason for requesting it.
• Financial Institutions - In limited cases, if you provide consent, financial institutions may access your BOI as part of compliance with Know Your Customer (KYC) regulations.

Privacy Protections

• Secure System - FinCEN is required to maintain the information in a secure, non-public database.
• Confidentiality - Unauthorized disclosure of BOI is prohibited by law, with penalties for violations.

Who is Required to File?

BOI filing applies to most U.S.-based businesses, including:

• LLCs, corporations, limited partnerships, and foreign entities operating in the U.S.
• Small businesses, even those with only a single owner, must comply.
• Freelancers who operate their businesses through a registered LLC or corporation must comply with BOI filing requirements, just like any other entity.

Exempt Entities

• Sole Proprietors - Freelancers or self-employed individuals operating as sole proprietors do not need to file since they are not separate legal entities.
• Nonprofits - Charitable organizations under 501(c) already have transparency requirements in place.
• Publicly Traded Companies - Listed on major stock exchanges and subject to stringent SEC reporting rules.
• Large Corporations - Companies with more than 20 full-time employees, over $5 million in annual revenue, and a physical presence in the U.S. are exempt. These entities already meet rigorous reporting requirements through other regulatory frameworks.
• Banks and Credit Unions - This includes private banks and federally insured credit unions, which are heavily regulated by federal and state agencies. They already disclose ownership and operational information as part of existing financial compliance requirements.
• Regulated Financial Institutions - Entities such as investment advisers, broker-dealers, and insurance companies are exempt because they are required to meet stringent anti-money laundering (AML) and customer due diligence (CDD) standards under existing laws, such as the Bank Secrecy Act.
• Other Government-Regulated Entities - Including insurance companies, utilities, and entities already subject to financial oversight.

Why Are Decision-Makers Included?

BOI filing is designed to identify not only the owners of a company but also those who have substantial control over its operations. Decision-makers are included because they may influence business activities in ways that could evade ownership-based tracking.

Examples of Decision-Makers

• Chief Executive Officers (CEOs) or Presidents that oversee the entire business.
• Chief Financial Officers (CFOs) who control financial operations and reporting.
• Managing Members (in LLCs) that direct day-to-day activities.
• General Partners (in partnerships) who drive operations and decision-making.
• Board Members that influence strategy, governance, and major decisions.

Why File Separately from Business Formation?

Business owners may wonder why BOI filing is necessary when similar information is already provided during LLC or corporation formation. Here’s why:

State vs. Federal Filings

• State Filings only include limited information, such as the registered agent or organizer, and often omit ownership or control details.
• BOI Filing provides FinCEN with federal-level oversight and tracks true owners and decision-makers.

Closing Loopholes

Anonymous shell companies have exploited gaps in state reporting for illegal activities. BOI filing ensures uniform and complete information nationwide.

What Are the Benefits of BOI Filing?

• Fraud Prevention - Reduces financial crimes, including money laundering, tax evasion, and terrorism financing.
• Level Playing Field - Prevents legitimate businesses from competing with fraudulent entities hiding behind anonymous ownership.
• Trust and Credibility - Increases confidence with financial institutions, regulators, and business partners.

Challenges of BOI Filing

• Privacy Concerns - Sensitive personal information, such as residential addresses and ID numbers, must be provided.
• Administrative Burden - Small businesses may find it time-consuming to gather and maintain required records.
• Stiff Penalties - Non-compliance can result in fines up to $500 per day and criminal charges.

What About Fraud?

A major reason for BOI filing is the staggering impact of global business fraud. Estimates indicate that 5-10% of the world’s 330 million businesses. This means that 16.5 to 33 million entities engage in fraudulent activities like tax evasion or false reporting, contributing to over $5 trillion in annual losses. These losses deprive communities of

• vital public services,
• exacerbate economic inequality, and
• stifle local economic growth.

For business owners,

• creates unfair competition,
• increases operating costs, and
• leads to stricter regulatory scrutiny.

BOI filing introduces a critical layer of accountability to combat these risks, safeguard honest businesses, and strengthen the broader economy and communities.

Steps to Comply with BOI Filing

1. Identify Beneficial Owners and Decision-Makers - Include anyone with 25% ownership or significant decision-making power.
2. Gather Required Information - Collect names, residential addresses, dates of birth, and government-issued IDs.
3. Watch this Official FinCEN Video - To make the process even easier, we are including a 5-minute YouTube video from FinCEN that walks you through the filing steps.
4. Submit to FinCEN - File through FinCEN’s secure online portal by January 13, 2025 (new deadline) for entities formed before January 1, 2024. Within 30 days for new businesses formed after January 1, 2024. IMPORTANT - Use only the official FinCEN website to file. Avoid third-party sites or services claiming to assist with BOI filing, as they may charge fees or compromise your data. Filing through FinCEN is completely free of charge.
5. Stay Compliant with Updates - Any changes in ownership or control must be reported within 30 days.

Bottom Line

BOI filing represents a significant shift toward greater transparency in the business world. While it adds new compliance requirements, it also strengthens protections against fraud and levels the playing field for legitimate businesses. By understanding the rules, ensuring accurate filings, and staying proactive, you can turn this requirement into an opportunity to showcase your company’s integrity.

For more information or assistance with BOI filing, consider reaching out to:

• Legal Professionals - specializing in business law or compliance.
• CPAs and Accountants - Many accounting firms offer services to help businesses navigate BOI filing and other regulatory requirements.
• State or Local Business Development Centers (SBDCs) - Many SBDCs offer free assistance and workshops on compliance matters, including BOI filing.
• Government Resources: Visit the FinCEN BOI website for detailed guidance, updates, and resources to help you navigate this process with confidence.

Make sure your filing is accurate and submitted on time to avoid unnecessary penalties.

Have you already completed your BOI filing? If so, what was your experience like? If you have questions, insights, or tips about the process, feel free to share them in the comments so others in our community can learn and navigate this requirement with confidence. Let’s support one another in staying compliant and informed!

I'm Roxana Colorado, an international business strategist and passionate advocate for community empowerment with a global perspective. I'm dedicated to creating strategies that drive economic growth, cultivate innovation, and empower the places where we live, work, and play. I write about impactful strategies to inspire growth and sustainability, with a focus on brand development, leadership, client experience, and business transformation.