Introduction
In the United States, businesses are subject to a wide variety of compliance requirements, ranging from tax filings to state-specific registrations. Among the newer and highly discussed requirements is the Beneficial Ownership Information (BOI) Report, introduced under the Corporate Transparency Act (CTA) and enforced by the Financial Crimes Enforcement Network (FinCEN).
Since its launch in January 2024, many business owners have been asking an important question: Is the BOI Report considered an annual report? The confusion arises because companies are already familiar with annual reports, LLC renewals, and franchise taxes, and they want to know if the BOI filing adds another yearly obligation.
This blog will explore in detail what the BOI Report is, how it differs from an annual report, what businesses need to know about compliance, and whether ongoing filings are required. By the end, you will have a clear understanding of the BOI filing requirements and how they fit into the broader compliance landscape for businesses.
What is the BOI Report?
The Beneficial Ownership Information Report is a federal filing requirement under the Corporate Transparency Act. It requires certain U.S. and foreign entities registered to do business in the U.S. to disclose information about the individuals who directly or indirectly own or control the company.
Purpose of the BOI Report
The BOI Report is designed to:
- Prevent money laundering and terrorist financing.
- Increase transparency in corporate ownership.
- Ensure that shell companies are not used for illegal activities.
- Provide FinCEN with a central database of beneficial owners accessible by law enforcement and certain government agencies.
Who Must File?
The BOI requirement applies to “reporting companies,” which generally include:
- Domestic reporting companies: Corporations, LLCs, or similar entities formed in the U.S. by filing with a state or tribal authority.
- Foreign reporting companies: Entities formed under foreign law but registered to do business in the U.S.
There are exemptions, including large operating companies (with more than 20 employees, $5 million in annual revenue, and a physical presence in the U.S.), certain banks, credit unions, insurance companies, and others.
Information Required in the BOI Report
The report must include details about:
- The company itself (legal name, trade name, EIN, address).
- Beneficial owners (name, date of birth, residential address, ID information).
- Company applicants (for entities created after January 1, 2024).
What is an Annual Report?
Before comparing, let’s clarify what an annual report is in the business compliance world.
State-Level Annual Reports for Businesses
In most states, an annual report (sometimes called a statement of information, annual statement, or periodic report) is a document filed by corporations, LLCs, and other entities to:
- Keep business information current with the state.
- Update details about company addresses, members, managers, or directors.
- Maintain “good standing” status with the Secretary of State.
These reports are usually due once a year (though some states require biennial filings). Filing fees typically range from $20 to $500, depending on the state and business type.
Content of an Annual Report
An annual report usually includes:
- Business name and registration number.
- Principal office address.
- Names and addresses of owners, managers, or directors.
- Registered agent details.
- Signature of an authorized representative.
Failure to file an annual report can result in late fees, penalties, and even administrative dissolution of the company.
Key Differences Between BOI Report and Annual Report
Now that we understand both filings, let’s compare them.
| Aspect | BOI Report | Annual Report |
|---|---|---|
| Authority | Federal (FinCEN, under U.S. Treasury) | State-level (Secretary of State or similar office) |
| Purpose | Collect ownership info to combat financial crimes | Update business info for state records |
| Who Files | Corporations, LLCs, and other reporting companies (with exemptions) | Businesses registered in the state (LLCs, corporations, nonprofits, etc.) |
| Frequency | One-time filing (with updates when changes occur) | Typically annual or biennial |
| Filing Fee | No filing fee | Fees vary by state |
| Information Reported | Beneficial owners’ personal details | Company address, management, registered agent |
| Penalty for Non-Compliance | Up to $500/day civil penalties; criminal penalties possible | Late fees, administrative dissolution |
The biggest distinction: the BOI Report is not an annual filing. It is a one-time submission, with updates only when necessary.
Is the BOI Report an Annual Report?
The short answer is no. The BOI Report is not an annual report. Unlike annual reports filed with state authorities, the BOI Report:
- Does not require yearly renewal.
- Only needs to be updated when there are changes in ownership or company details.
- Is filed with a federal agency (FinCEN), not the state.
This means businesses should not confuse the BOI filing with their state’s annual or biennial reporting obligations. Instead, it is an additional federal compliance requirement.
When Do You File a BOI Report?
Initial Filing Deadlines
- Companies formed before January 1, 2024: Must file their BOI Report by January 1, 2025.
- Companies formed on or after January 1, 2024, but before January 1, 2025: Must file within 90 days of formation.
- Companies formed on or after January 1, 2025: Must file within 30 days of formation.
Updates to the BOI Report
Businesses must file an updated report within 30 days if there are changes, such as:
- A new beneficial owner is added.
- Ownership percentages change.
- An owner’s name, address, or identification changes.
- The company undergoes major restructuring.
There is no requirement for an annual update if nothing changes.
Why the Confusion Between BOI and Annual Reports?
Many small business owners assume the BOI is an annual filing because:
- They are accustomed to filing state annual reports.
- The term “report” suggests something that must be filed regularly.
- Other compliance filings, like tax returns or franchise taxes, are recurring.
However, the BOI is unique. It is designed to be filed once and only updated as needed. This makes it less burdensome than an annual report but equally important, as penalties for non-compliance are much more severe.
Penalties for Non-Compliance
Non-compliance with the BOI Report is far riskier than missing an annual report.
- Civil penalties: $500 per day for every day of non-compliance.
- Criminal penalties: Up to $10,000 in fines and up to 2 years in prison for willful failure to file or knowingly filing false information.
In comparison, missing a state annual report typically leads to late fees and possible dissolution but not criminal charges.
How to File the BOI Report
Filing the BOI Report is done electronically through FinCEN’s secure filing system.
Steps to File
- Visit FinCEN’s BOI filing system (online portal).
- Create or log in with a FinCEN ID.
- Complete the form with company information.
- Enter beneficial owner details (name, DOB, address, ID).
- Submit electronically.
- Save confirmation of filing.
The process is free and designed to be straightforward, though accuracy is critical.
Practical Example
Imagine ABC Consulting LLC, formed in 2022 in Florida.
- Since it was created before January 1, 2024, it must file its BOI Report by January 1, 2025.
- Its annual report with the Florida Department of State is still due every year by May 1.
- If in 2026, one of the members sells their ownership share, ABC Consulting LLC must file an updated BOI Report within 30 days.
This shows how the BOI Report and annual report are separate obligations.
Best Practices for Businesses
- Mark Deadlines Clearly: Keep track of your BOI due date separately from state annual reports.
- Maintain Updated Records: Keep copies of beneficial ownership documents (e.g., driver’s licenses, passports).
- Review Ownership Regularly: Whenever there’s a transfer or change in control, prepare to update your BOI filing.
- Seek Professional Help: Consult accountants or compliance specialists to avoid mistakes.
- Don’t Confuse Compliance: Remember, the BOI is federal and one-time (with updates), while annual reports are state-level and recurring.
Future of BOI Reporting
The BOI reporting requirement is new, and future updates or amendments are possible. Some areas to watch:
- Integration with state filings: In the future, states may streamline reporting by linking their annual reports with FinCEN’s database.
- Increased enforcement: As the system matures, non-compliance penalties may be enforced more aggressively.
- Business community pushback: Some small business organizations have raised concerns about privacy and burden, which could influence future modifications.
Conclusion
So, is the BOI Report an annual report? No, it is not.
The BOI Report is a federal requirement under the Corporate Transparency Act, filed with FinCEN to disclose beneficial ownership details. It is a one-time filing, with updates required only when company ownership or information changes. In contrast, an annual report is a state-level requirement filed every year (or every two years) to keep company information current with the Secretary of State.
Understanding the difference is crucial for business owners. Confusing the two could result in severe penalties for non-compliance. By staying informed and organized, companies can meet both obligations efficiently and avoid unnecessary risks
