As part of the U.S. government’s efforts to make it harder for bad actors to hide ownership structures and participate in money laundering, Congress passed the Corporate Transparency Act of 2021, which created a new beneficial ownership information reporting requirement.
Beneficial ownership information (BOI) refers to identifying information about the individuals who directly or indirectly own or control a company.
Who is considered a beneficial owner?
Refer to the information provided by our trusted partners at Wolters Kluwer. Justworks customers are eligible for discounted services. Contact your Customer Success Manager or our 24/7 Support team for more details.
How do I know if I need to file a BOI report?
Take this quick quiz, provided by our partners at Wolters Kluwer, to determine if your company may be required to file a BOI report.
If it turns out you do need to file a BOI report, keep reading to learn more on what that means for your business.
What does this mean for you, a Justworks' customer?
This reporting requirement applies to most small businesses nationwide.
- If your company was created before January 1, 2024, you must file the initial BOI report by January 1, 2025.
- If your company was created on or after January 1, 2024, you must file the BOI report within 90 calendar days of receiving notice that your company’s creation or registration is effective.
How often do you need to file a BOI report?
If there are any changes to your beneficial ownership information after your initial BOI report filing, you will have 30 days from the date of change to update your filing report.
Changes requiring a new filing can include, but are not limited to, changes to ownership, changes to owner’s addresses, etc.
Take this quick quiz to determine if your company may be required to file a BOI report, provided by our partners at Wolters Kluwer.
What type of information needs to be reported?
There are three sectors of information that need to be reported:
- Information about the company such as full legal name, any trade or dba name, current address of the primary place of business, state of formation and EIN.
- Personal Identifiable Information for all beneficial owners, such as legal name, date of birth, current residential address, and a unique identification document (such as passport or driver’s license).
- Personal Identifiable Information for applicants (applicable to companies formed on or after January 1, 2024). In addition to the information provided for beneficial owners above, the business address must be included.
Are there penalties for not filing?
A person who willfully violates BOI reporting requirements can face civil penalties up to $500 (subject to inflation, currently $591) for each day of violation, as well as criminal penalties of up to two years imprisonment and a fine of up to $10,000.
Potential violations include willfully failing to file a beneficial ownership information report, willfully filing false beneficial ownership information, or willfully failing to correct or update previously reported beneficial ownership information.
Do you need to file?
Justworks has partnered with Wolters Kluwer to help small businesses stay compliant and accurately file BOI reports with the Financial Crimes Enforcement Network (FinCen) so you can continue to grow with confidence. If you are not sure if you are considered a reporting company, or where to start the filing process you can connect with our partner to get started.
Want to learn more? Below are answers provided by our partners at Wolters Kluwer to some frequently asked questions.
BOI FAQs
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What is the deadline for filing?
- To stay compliant, companies considered reporting entities formed before January 1, 2024, must file a BOI report by January 1, 2025. Companies formed after January 1, 2024, must file a BOI report within 90 calendar days after receiving notice of creation or registration. If ownership information or an owner’s information changes, updated filings will likely be required within 30 calendar days of the change.
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In a worker-owned cooperative where all owners hold equal shares, but no one owns more than 10%, how should we report?
- The reporting requirement states that the BOI report should include any owner who owns 25% or more, and anyone who has substantial control. This includes titles such as CEO, CFO, COO or anyone who acts in those capacities even without the formal title. For example, those who make decisions about major expenditures or those who are able to appoint or remove senior officers.
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If my Parent LLC is a large operating company, but I have smaller sub-entities that don't meet the large operating company exemption, do I have to file BOI reports for those sub-entities?
- The regulation states that if those subsidiaries meet the definition of a reporting company and none of the 23 exemptions apply, they will have to file a BOI report.
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Is there a case where you do not have to create a FinCEN ID?
- FinCEN IDs are not required. If you do have a FinCEN ID you would enter that ID number instead of your personally identifiable information (PII). If any of your PII changes you are under a 30 day obligation to update your information within the FinCEN ID, regardless of if you are a beneficial owner or not.
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What if an owner is foreign?
- A foreign ID should be used for personally identifiable information (PII) only if the owner does not have a valid US passport, state ID, driver’s license or tribal ID.
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Would an admin who is filling out this information on behalf of the owner be considered a beneficial owner?
- Just filing out the report does not make someone a beneficial owner. They would need to have ownership of at least 25%, or exercise substantial control.
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Do inactive or dissolved entities need to file?
- There are some exemptions but to have a more clear answer take this free quiz offered by Wolters Kluwer to determine if you are considered a reporting company.
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Does a new BOI report need to be filed every time a beneficial owner’s passport or driver’s license is renewed?
- As long as the document ID and other personally identifiable information (PII) stays the same, a new report is not required. If there are changes to the document ID, an update must be filed within 30 days of the change.
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What happens if an owner’s ownership percentage drops below 25%?
- You have 30 days to update your report once any changes occur, that includes removing those that are no longer considered beneficial owners.
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If an investment firm owns more than 25% how should that be reported?
- A beneficial owner is always a person or people; it is never an entity or parent company. You should determine who are the people who have substantial control through that investment firm.
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How can I receive the 10% discount offered through the Justworks - Wolters Kluwer partnership?
- You can click the link here to bring you directly to the Justworks + Wolters Kluwer landing page; then click Start Your BOI Filing Now. If you use this link the discount will be automatically applied. Alternatively, you can use the code Jworks10 at checkout to receive the discount.
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What sort of live help is offered by Wolters Kluwer?
- While unable to give legal advice, there is a help line that connects you with a live agent to help assist in completing your filing.
Disclaimer
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor. Justworks may receive a commission or other remuneration for products or services purchased through our preferred partners. All product descriptions are provided by preferred partners. Justworks makes no representations regarding the products or services provided by preferred partners or the suitability of such products or services for your company’s needs or any particular purpose.