WHAT IS IT?
Beneficial Ownership Information (BOI) reporting is a requirement under the federal Corporate Transparency Act (CTA) that began on January 1, 2024. The CTA mandates certain US and foreign entities to file a BOI report with the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Department of Treasury. This report lists the individuals who own or control a company, including their names, addresses, and identifying documents. Beneficial owners are defined as individuals with at least 25% ownership or those exercising substantial control over an entity.
WHY IS IT REQUIRED?
The purpose of BOI reporting is to bolster the US financial system by making it more difficult for criminals to use shell companies to hide assets or launder money. Additionally, it helps establish trust with legitimate businesses and owners and aids in identifying risk exposure.
WHO IS REQUIRED TO REPORT AND WHO IS EXEMPT?
If you are uncertain whether you need to file, consider if you are an LLC in the US. You are exempt if your business falls into one of the following categories:
- Securities reporting issuer
- Governmental authority
- Bank
- Credit union
- Depository institution holding company
- Money services business
- Broker or dealer in securities
- Securities exchange or clearing agency
- Other Exchange Act registered entity
- Investment company or investment adviser
- Venture capital fund adviser
- Insurance company
- State-licensed insurance producer
- Commodity Exchange Act registered entity
- Accounting firm
- Public utility
- Financial market utility
- Pooled investment vehicle
- Tax-exempt entity
- Entity assisting a tax-exempt entity
- Large operating company
- Subsidiary of certain exempt entities
- Inactive entity
If you are an LLC and not exempt, you MUST file by January 1, 2025. The penalty for not filing is $600 per day after the deadline.
WHEN IS THE DEADLINE TO REPORT?
Entities in existence as of December 31, 2023, have until December 31, 2024, to file their initial report. An entity formed during 2024 will have 90 days to file its initial report, per updated guidance provided by FinCEN in late November 2023. The BOI reporting is not an annual or recurring filing; however, if there are any changes to your business, you must update your report within 30 days.
WHO FILLS OUT THE REPORT?
Given that BOI reporting is a legal compliance matter, Innovative Accounting cannot make the filing on behalf of our clients. We encourage our clients to review our explanation of the BOI reporting rules and the information provided at the FinCEN FAQ page. If you determine that you have a filing requirement and understand the required information, you can file directly to FinCEN using the FinCEN e-filing system.
For assistance in determining whether you need to file a BOI report, we advise our clients to consult with their attorneys to assist with the legal filing. Additionally, several corporate compliance service companies offer filing assistance for a reasonable fee.
HOW IS THE REPORT SUBMITTED?
Reports can be filed electronically using the BOI E-Filing System. They only need to be submitted once unless the filer needs to update or correct information. Follow these steps for submission:
- Click File Online BOIR.
- Choose “Initial Report” if your company existed before January 1, 2024.
- Enter your legal name and any DBAs you use.
- Provide your EIN at #7.
- Indicate “United States of America” at #10 if formed in the U.S, specifying the state or tribal jurisdiction your business was incorporated in.
- Enter the current business address at #11.
- Check the box at #16 if your company existed before January 1, 2024 – Part II will not be required – Click Next.
- Enter Beneficial Owner Information for each owner or member of the company who exercises substantial control.
- Beneficial Owner Information will require their name, date of birth, address, form of identification, and an image of their identification.
- Complete fields indicating that you are authorized to submit this report on behalf of the company.
Take 60 seconds to see if the new BOI requirements applies to you by taking our free BOI Quiz: https://ctaintegrity.com/boi-quiz/
