If you’re a business owner frantically searching for information on beneficial ownership information (BOI) reporting, look no further. This guide will give you a better understanding as to what needs to be filed and how to file it properly to avoid hefty late fees.
Financial crimes and the misuse of companies have become increasingly complex. To combat this, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has implemented new beneficial ownership reporting rules. The goal is to increase transparency around who controls companies. This makes it harder for criminals to hide behind convoluted corporate structures to launder money, evade taxes, and commit fraud. By shining a light on the true owners, these regulations aim to curb sophisticated financial crimes that exploit opaque business entities.
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- The government is not maliciously targeting small businesses with these requirements, but small business owners are caught in the crosshairs as a result of complex financial crimes generally committed at large scales.
- The timeline for filing the BOI is between 30 days and 1 year depending on when your company was registered.
- The beneficial ownership report is easy to fill out on your own and takes about 5-10 minutes to complete.
What is Beneficial Ownership?
A beneficial owner is an individual who directly or indirectly owns or controls a company. The beneficial ownership report seeks to enhance transparency in business operations and prevent the misuse of corporate structures.
What is The Corporate Transparency Act (CTA)?
Enacted by Congress in 2021, the Corporate Transparency Act mandates this new reporting requirement. It’s a significant step in the U.S. government’s efforts to deter malevolent actors from exploiting opaque ownership structures for illicit purposes.
Who Has Access to BOI Information?
FinCEN will permit certain U.S. and foreign officials, as well as financial institutions (with the reporting company’s consent), to access beneficial ownership information. This data, stored in a secure database, is intended for use in national security, intelligence, and law enforcement activities.
How to File Beneficial Ownership Report
Reporting Deadlines:
Companies existing before January 1, 2024 must report by January 1, 2025.
Companies registered in 2024 have 90 days post-registration.
Companies registered from January 1, 2025 onwards have 30 days post-registration.
Is there a fee for filing a BOI?
There is no fee for submitting beneficial ownership information to FinCEN.
Do I have to file a BOI?
Domestic Reporting Companies:
Corporations, LLCs, and other entities created via state filing.
Foreign Reporting Companies:
Foreign entities registered to do business in the U.S.
Who is exempt from BOI reporting?
23 exempted entity types. Review these carefully to determine reporting obligations.
How do I file a BOI for my business?
Reports are filed electronically via FinCEN’s BOI E-Filing website.
What if I Don’t File Beneficial Ownership Information?
FinCEN states that “a person who willfully violates the BOI reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues. That person may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000”.
Conclusion
Adhering to these new beneficial ownership reporting standards is essential for compliance. As your small business accounting partner, we’re here to assist you in not only meeting, but understanding these requirements.
For more information and updates on beneficial ownership reporting, visit FinCEN’s BOI fact sheet.
