Beneficial Ownership Information Reporting: What Business Owners Need to Know

Did you complete the REQUIRED BOI requirement so you will avoid hundreds to thousands of dollars for a penalty in 2025?  As a business owner, you're likely familiar with various reporting obligations, but a relatively new requirement is gaining attention: Beneficial Ownership Information (BOI) reporting. In this blog post, we’ll break down what BOI reporting is, why it's required, the deadlines you need to be aware of, and the potential penalties for non-compliance. We'll also clearly outline what information is required and how to complete the process.

What is Beneficial Ownership Information (BOI) Reporting?

BOI reporting is a requirement that enhances transparency in the ownership of certain businesses. It helps the government identify who ultimately owns or controls a company, which is essential in combating financial crimes such as money laundering, fraud, and terrorism financing.

This requirement was introduced under the Corporate Transparency Act (CTA), a law that mandates certain business entities to disclose their beneficial owners—those individuals who directly or indirectly own or control at least 25% of the company. The information collected is intended to help law enforcement and regulatory agencies better track the true owners of companies, ensuring that criminals can't hide behind layers of complex corporate structures.

Why is BOI Reporting Required?

The BOI reporting requirement aims to increase transparency and accountability in business dealings. Criminals often use shell companies or complex ownership structures to obscure who is really in control of a business. By requiring businesses to disclose their beneficial owners, the government can more easily track illicit activities like money laundering, tax evasion, and other fraudulent schemes. In short, it's about creating a safer and more transparent business environment.

Does your business need to file? Check this flow chart:

 

Reporting Deadlines

The reporting deadlines for BOI requirements depend on the status of your business:

• Existing Companies: If your company was created or registered before January 1, 2024, you must file your beneficial ownership report by January 1, 2025.
• Newly Formed Companies: For entities created or registered on or after January 1, 2024, BOI reports are due within 30 days of formation or registration.

It’s essential to meet these deadlines to avoid potential penalties, which can be significant.

Penalties for Non-Compliance

Failure to comply with BOI reporting requirements can lead to severe consequences:

• Civil Penalties: Fines of up to $500 per day until the report is submitted or the error is corrected.
• Criminal Penalties: Intentional failure to file or provide false information can result in fines up to $10,000 and up to two years in prison.

These penalties highlight the importance of ensuring that your business complies with these new regulations.

What Information is Required?

To meet the BOI reporting requirements, you'll need to gather the following information about your company's beneficial owners:

1. Full Legal Name of the beneficial owner.
2. Date of Birth of the beneficial owner.
3. Current Residential or Business Address where the beneficial owner resides or conducts business.
4. Unique Identification Number from an acceptable form of identification such as a:
• Passport
• Driver's license
• Government-issued ID card
5. Copy of the Identification Document (such as a passport or driver’s license) submitted with the beneficial owner's information.

If any changes occur regarding the beneficial ownership of the company, such as the addition of a new owner or changes to the information provided, the company must update the BOI within 30 days of the change.

How to Complete the BOI Reporting Requirement

The BOI reporting process is straightforward but requires attention to detail. Here’s how to ensure your business complies:

1. Gather Necessary Information: Collect the full names, addresses, dates of birth, and identification documents for all individuals who qualify as beneficial owners.
2. Submit Your Report: Use the FinCEN (Financial Crimes Enforcement Network) portal, which is the designated platform for submitting BOI reports. FinCEN will store this information in a secure, confidential database accessible only to authorized government entities.
3. Keep Information Updated: Any changes to your business's ownership or beneficial owner details must be reported within 30 days. Make sure to have systems in place to track these changes and update your BOI report accordingly.
4. Consult a CPA or Legal Professional: Given the complexity of the rules, it may be worth consulting a legal advisor or a compliance professional to ensure you’re submitting everything correctly and on time.

Final Thoughts

Beneficial Ownership Information reporting is an important new requirement for many business entities, designed to enhance transparency and prevent financial crimes. By understanding the deadlines, penalties, and required information, you can ensure your business stays compliant and avoids costly penalties. Start preparing now, gather the necessary information, and file your BOI report on time. Here is a link to learn more about BOI or download this brochure or visit www.fincen.gov.

If you’re unsure about any aspect of the process, seeking professional guidance can save time and ensure your business remains on the right side of the law.