BOI (Beneficial ownership information)

[Salvatore Spano]

Are some LLCs exempt from submitting this info? In particular, sole proprietorships? Does anybody know?

Thanks.

[Zachary Jensen]

Quote from @Salvatore Spano:

Are some LLCs exempt from submitting this info? In particular, sole proprietorships? Does anybody know?

Thanks.

 Hello Salvatore, per the BOI Small Compliance Guide v1.1:

2.4 Who qualifies for an exception from the beneficial
owner definition?
There are five exceptions to the definition of beneficial owner. When an individual who
would otherwise be a beneficial owner of a reporting company qualifies for an exception, the
reporting company does not have to report that individual as a beneficial owner in its BOI
report to FinCEN. The following checkboxes are intended to help your company determine
whether any exceptions apply to individuals who might otherwise qualify as beneficial owners
of your company.
Minor Child (Exception #1)
An individual qualifies for this exception if the following criterion applies:
1. The individual is a minor child, as defined under the law of the
State or Indian tribe in which the domestic reporting company is
created or the foreign reporting company is first registered.
 Yes  No
Special rule for minor child: If the answer above is yes, the reporting company may instead
report information about the parent or legal guardian of the minor child.
Note: This exception only applies if a parent or legal guardian’s information is reported in lieu
of the minor child’s information. Also, when the minor child reaches the age of majority, as
defined by the law of the State or Indian tribe in which the reporting company was created or
first registered, the exception no longer applies. At that time, if the individual is a beneficial
owner, the reporting company must file an updated BOI report providing the individual’s own
information. See Chapter 6 for more information on when an updated report may be required.
Nominee, intermediary, custodian, or agent (Exception #2)
An individual qualifies for this exception if the following criterion applies:
2. The individual merely acts on behalf of an actual beneficial
owner as the beneficial owner’s nominee, intermediary,
custodian, OR agent.
Note: Individuals who perform ordinary advisory or other
contractual services (such as tax professionals) likely qualify for
this exception. In scenarios where this exception applies, the actual
beneficial owner must still be reported.
 Yes  No
Beneficial Ownership Information Reporting Requirements
Small Entity Compliance Guide, December 2023 - Version 1.1
30
Employee (Exception #3)
An individual qualifies for this exception if all three of the following criteria apply:
1. The individual is an employee of the reporting company, when
applying the meaning of “employee” provided in 26 CFR
54.4980H-1(a)(15). In general, the term employee means that
an individual is subject to the will and control of the employer in
what and how to do work, and that the employer may discharge
the individual from work.
 Yes  No
2. The individual’s substantial control over, or economic benefits
from, the reporting company are derived solely from the
employment status of the individual as an employee.
 Yes  No
3. The individual is not a senior officer of the reporting company.
The term “senior officer” means any individual holding the
position or exercising the authority of a president, chief
financial officer, general counsel, chief executive officer,
or chief operating officer, or any other officer, regardless of
official title, who performs a similar function.
 Yes  No
Inheritor (Exception #4)
An individual qualifies for this exception if the following criterion applies:
1. The individual’s only interest in the reporting company is a
future interest through a right of inheritance, such as through a
will providing a future interest in a company.
 Yes  No
Note: Once the individual inherits the interest, this exception no longer applies, and the
individual may qualify as a beneficial owner. See Chapter 6 for more information on when an
updated report may be required in this circumstance.
Beneficial Ownership Information Reporting Requirements
Small Entity Compliance Guide, December 2023 - Version 1.1
31
Creditor (Exception #5)
An individual qualifies for this exception if the following criterion applies:
1. The individual is a creditor of the reporting company.
The term “creditor” means an individual who would meet the
definition of a beneficial owner of the reporting company solely
through rights or interests for the payment of a predetermined sum
of money, such as a debt incurred by the reporting company, or
a loan covenant or other similar right associated with such right
to receive payment that is intended to secure the right to receive
payment or enhance the likelihood of repayment.
For example, an individual qualifies for the creditor exception if
the individual is entitled to payment from the reporting company
to satisfy a loan or debt, so long as this entitlement is the only
ownership interest the individual has in the reporting company.

[Salvatore Spano]

From what I read, it seems that I am not exempt as I don't satisfy condition no.3:

The individual is not a senior officer of the reporting company.

Thanks for your post.

[Chris Seveney]

@Salvatore Spano

It takes under 5 minutes to complete and it’s free.

[John Malone]

@Chris Seveney for some** for others it becomes complex. For ex, do you have a CFO with 0% equity? Well that may be a BO. Most SMLLCs are basic but syndicates, funds and larger businesses have complexity

[Joseph Agins]

Quote from @Chris Seveney:

@Salvatore Spano

It takes under 5 minutes to complete and it’s free.

 Sounds like I will need to do this as well.

[Joseph Agins]

BOI E-FILING (fincen.gov)

[Ashish Acharya]

@Salvatore Spano Yes, some LLCs are exempt from submitting Beneficial Ownership Information (BOI), such as large operating companies with over 20 employees and $5 million in gross receipts and certain regulated entities like banks or insurance companies. Sole proprietorships, which don't have legal separation from the owner, typically aren't subject to BOI reporting. However, SMLLC needs to file the BOI.

[Stanley Bronstein]

As a general rule, I would say that just about everyone who frequents Bigger Pockets who has an LLC is probably NOT going to be exempt and needs to plan on filing.

Stanley F. Bronstein

Attorney, CPA, Broker and Author
Licensed in Arizona and Texas

Website: https://filectapapers.com

[Jason Malabute]

Yes, some LLCs are exempt from submitting Beneficial Ownership Information (BOI). For example, large operating companies with over 20 employees and $5 million in gross receipts, as well as certain regulated entities like banks or insurance companies, may be exempt. Sole proprietorships, which do not have legal separation from the owner, typically aren't subject to BOI reporting. However, if you have a Single-Member LLC (SMLLC), it will need to file the BOI.

Entities that must file the BOI include:

1. Small and Medium-sized LLCs: Typically required to file unless they meet specific exemption criteria, such as being highly regulated or having significant gross receipts.

2. Single-Member LLCs (SMLLCs): Required to file because they are legally separate from their owners, even if they only have a single owner.

3. Other Non-Exempt Entities: Any business not meeting the exemption criteria must comply with BOI filing requirements.

Filing Deadlines:

• Entities created or registered before January 1, 2024: Must submit their BOI by January 1, 2025.

• Entities created or registered on or after January 1, 2024: Must submit their BOI within 30 days of their creation or registration.

Penalties for Non-Compliance:

Failure to file the BOI as required can result in significant penalties, including:

• Civil penalties: Fines of up to $500 per day for each day the violation continues.

• Criminal penalties: Potential fines of up to $10,000 and imprisonment for up to two years for willful violations.

Therefore, it’s crucial to meet the filing deadlines to avoid these penalties.

As Chris mentioned, completing the BOI submission process is straightforward. It takes under 5 minutes, and it’s free to submit. So, it’s a simple yet important process to ensure your entity stays in compliance.

[Stanley Bronstein]

@Jason Malabute Yes, it is easy and straightforward, UNLESS you have a complicated structure in your LLC. Then it can be quite tricky. I know because some of the filings I've done on behalf of clients involve quite a bit of legal analysis BEFORE filing.

Stanley F. Bronstein

Attorney, CPA, Broker and Author
Licensed in Arizona and Texas

Website: https://filectapapers.com