Do Inactive Business Entities Need to File a BOI Report?

Some business owners have expressed confusion over whether they must file a beneficial ownership information (BOI) report if their business entity ceased to exist before the BOI reporting requirements took effect on January 1, 2024. Fortunately, the Financial Crimes Enforcement Network (FinCEN) has finally provided some clarity on the topic!

Here is a summary what you need to know about reporting for inactive businesses:

• If a business entity ceased to conduct business and formally dissolved before January 1, 2024, it was never subject to the BOI reporting requirement. Therefore, it does not have to submit its beneficial ownership information to FinCEN.
• If a business entity stopped engaging in business activities before January 1, 2024, but did not complete the dissolution process until on or after that date to formally cease its existence, it IS responsible for reporting its beneficial ownership information to FinCEN by January 1, 2025, if it meets the definition of a reporting company.
• If a reporting company was formed in 2024 or later and ceases doing business and dissolves the entity before its initial BOI report is due, it must submit its beneficial ownership information to FinCEN.

Official FinCEN Updates to the FAQs

FinCEN updated its BOI FAQs section on its website on July 8, 2024, with answers to two burning questions. Here’s what FinCEN has posted on the matter.

Is a company required to report its beneficial ownership information to FinCEN if the company ceased to exist before reporting requirements went into effect on January 1, 2024?

A company is not required to report its beneficial ownership information to FinCEN if it ceased to exist as a legal entity before January 1, 2024, meaning that it entirely completed the process of formally and irrevocably dissolving. A company that ceased to exist as a legal entity before the beneficial ownership information reporting requirements became effective January 1, 2024, was never subject to the reporting requirements and thus is not required to report its beneficial ownership information to FinCEN.

Although state or Tribal law may vary, a company typically completes the process of formally and irrevocably dissolving by, for example, filing dissolution paperwork with its jurisdiction of creation or registration, receiving written confirmation of dissolution, paying related taxes or fees, ceasing to conduct any business, and winding up its affairs (e.g., fully liquidating itself and closing all bank accounts).

If a reporting company (see Question C.1) continued to exist as a legal entity for any period of time on or after January 1, 2024 (i.e., did not entirely complete the process of formally and irrevocably dissolving before January 1, 2024), then it is required to report its beneficial ownership information to FinCEN, even if the company had wound up its affairs and ceased conducting business before January 1, 2024.

Similarly, if a reporting company was created or registered on or after January 1, 2024, and subsequently ceased to exist, then it is required to report its beneficial ownership information to FinCEN—even if it ceased to exist before its initial beneficial ownership information report was due.

For specifics on how to determine when a company ceases to exist as a legal entity, consult the law of the jurisdiction in which the company was created or registered. A company that is administratively dissolved or suspended—because, for example, it failed to pay a filing fee or comply with certain jurisdictional requirements—generally does not cease to exist as a legal entity unless the dissolution or suspension becomes permanent.

If a reporting company created or registered in 2024 or later winds up its affairs and ceases to exist before its initial BOI report is due to FinCEN, is the company still required to submit that initial report?

Yes. Reporting companies created or registered in 2024 must report their beneficial ownership information to FinCEN within 90 days of receiving actual or public notice of creation or registration. Reporting companies created or registered in 2025 or later must report their beneficial ownership information to FinCEN within 30 days of receiving actual or public notice of creation or registration. These obligations remain applicable to reporting companies that cease to exist as legal entities—meaning wound up their affairs, ceased conducting business, and entirely completed the process of formally and irrevocably dissolving—before their initial beneficial ownership reports are due. If a reporting company files an initial beneficial ownership information report and then ceases to exist, then there is no requirement for the reporting company to file an additional report with FinCEN noting that the company has ceased to exist.

Additional Resources

With hefty civil and criminal penalties for failing to file a BOI report (if required), people have understandably been uneasy about the lack of guidance on the matter.

For additional information about the BOI reporting requirement, here are several resources we’ve created to help:

• CorpNet’s Beneficial Ownership FAQs and What If Scenarios
• What Is a BOI Report and Do You Need to File One?
• Company Applicant Vs. Beneficial Owner?
• Should You File a BOI Report Amid the CTA’s Questionable Constitutionality?