Why and How to File a BOI Report for Your LLC, Franchise, or Business Entity
If you own an LLC, a franchise, or another business entity, you may have received correspondence from your registered agent or another party advising you to file a Beneficial Ownership Information (BOI) report. This requirement, part of the Corporate Transparency Act (CTA) implemented by the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), aims to prevent illicit financial activities and ensure transparency in business ownership. Filing is straightforward and free through FinCEN’s official website, so there’s no need to pay for unnecessary third-party services.
What Is a BOI Report and Why Is It Required?
A BOI report is used to disclose details about a business entity’s ownership and control. It requires you to provide information about:
- Beneficial owners: Individuals who own or control at least 25% of the entity or hold significant decision-making authority.
- Company applicants: Individuals who filed to register the business (required for businesses formed after January 1, 2024).
The purpose is to build a secure, non-public database for law enforcement to use in combating financial crimes.
Filing Deadlines
Your deadline for filing depends on when your business was formed:
- Existing entities (formed before January 1, 2024): File by January 1, 2025.
- New entities (formed on or after January 1, 2024): File within 30 days of formation.
How to File Your BOI Report
- Visit the Official FinCEN Website
Go to https://www.fincen.gov/boi to access the BOI filing portal. - Prepare Your Information
You’ll need:
- Entity Details: Legal name, principal address, and jurisdiction of formation.
- Beneficial Owners’ Information: Names, birthdates, residential addresses, and ID details (e.g., driver’s license or passport).
- Company Applicant Information: For entities formed after January 1, 2024, include details about the individual who registered the business.
- File Your Report
Use the online system to submit your information. Save your confirmation receipt for your records.
Is Filing a BOI Report a One-Time Requirement?
No, the BOI report is not a one-time task. You must update it to reflect changes to your business:
- Update Within 30 Days
File an updated BOI report within 30 days of any changes, such as:
- Adding a new DBA (Doing Business As) name.
- Changes to ownership or control, such as a new partner or a change in ownership percentages.
- Updates to beneficial owners’ information, such as a new address or ID.
- Changes to your legal entity’s name, address, or structure.
- Corrections for Errors
If you discover a mistake in your report, you must correct it within 30 days of identifying the error. - No Annual Re-Filing Required
Unlike some state-level filings, you don’t need to re-file annually unless changes occur.
Special Considerations for Franchises
If your business is a franchise, your BOI reporting obligations depend on your franchise’s legal structure:
- Independent Legal Entities
- If your franchise operates as an LLC, corporation, or other distinct legal entity, you must file a BOI report for your specific franchise entity.
- This applies even if your franchise is part of a larger brand or network.
- Sole Proprietorships
- If your franchise operates as a sole proprietorship, it is likely exempt from BOI reporting requirements since sole proprietorships are not considered separate legal entities.
- Franchisor’s Responsibility
- The franchisor (the parent company that owns the franchise brand) is responsible for filing its own BOI report. This is separate from the franchisee’s filing obligation.
- What to Include
- Report the legal details of your franchise business, including beneficial owners. Do not include the franchisor’s information unless they directly own or control part of your specific entity.
What About Sub-Brands?
If your business operates a sub-brand that is not registered as a DBA (Doing Business As), it typically does not need to be included in your BOI report unless it affects your legal entity:
- No Reporting for Unregistered Sub-Brands: If the sub-brand is just a marketing name and not a separate legal entity or DBA, it doesn’t require BOI reporting.
- When to Report: If the sub-brand is registered as a DBA or changes ownership or control of your legal entity, you must update your BOI report.
- Separate Entities: If the sub-brand becomes its own LLC or corporation, it must file a separate BOI report.
Avoid Paying for Filing Services
Many companies and registered agents offer to file your BOI report for a fee, but this is unnecessary. The filing process is simple and free through FinCEN.
Save yourself time and money by filing directly at https://www.fincen.gov/boi.
Penalties for Non-Compliance
Failure to file or update your BOI report can result in serious consequences, including:
- Fines: Up to $500 per day for non-compliance.
- Criminal Charges: For willfully failing to comply or providing false information.
Final Thoughts
Filing your BOI report is an important legal requirement for business compliance under the Corporate Transparency Act. Whether you operate an LLC, a franchise, or a business with sub-brands, ensuring your report is accurate and up-to-date is essential.
For more information or to file, visit https://www.fincen.gov/boi. By staying proactive, you can avoid penalties and focus on growing your business.