Beneficial Ownership Information Reports: What You Need to Know
As part of the federal government’s anti-money laundering and anti-tax evasion efforts, the Corporate Transparency Act requires that business owners file Beneficial Ownership Information (BOI) reports with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). If your business is deemed a reporting company, you must file this report by January 1, 2025.
Read on to find out more about the BOI filing requirements.
What is Beneficial Ownership Information?
Beneficial ownership information refers to identifying information such as name, date of birth, address, passport, or driver’s license number of the individuals who directly or indirectly own or control a company.
Who is considered a beneficial owner?
Beneficial owners are broadly defined and involve owners who directly or indirectly own at least 25% of the entity’s ownership interests or exercise “substantial control” over the reporting company. It can encompass many senior officers of the business and those involved in any significant business decisions (e.g., board members).
Which businesses are considered reporting companies?
Domestic corporations, limited liability companies (LLCs), limited partnerships, and other entities that file formation papers with a state’s Secretary of State’s office (or similar government agency) must file a report with FinCEN. Foreign reporting companies must also file if they registered to do business in the United States by filing a document with a secretary of state or any similar office.
A sole proprietorship is not considered a reporting company, unless they have filed with the secretary of state’s office. There are 23 types of companies that are exempt from this requirement.
Is this report filed annually?
No. This report is filed once and only needs to be updated if the reported information changes or needs a correction.
What information is included in a BOI report?
The information included in the Beneficial Owners Information report is as follows:
Company information:
- Legal name
- Trade names, “doing business as” (d/b/a), or “trading as” (t/a) names
- Current address
- Jurisdiction of formation or registration; and
- Taxpayer Identification Number (TIN)
A reporting company must also indicate whether it is filing an initial report, a correction, or an update of a prior report.
Beneficial owner information:
- Name
- Date of birth
- Address
- ID such as a passport or driver’s license
The reporting company will also have to report an image of the identification document.
For businesses created on or after January 1, 2024, this report also requires the same information about company applicants - the person filing the report. If the person filing the report is a professional or business filing on behalf of the owner, the address required will be their business address.
Are there penalties for not filing a BOI report?
As specified in the Corporate Transparency Act, 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. However, this civil penalty amount is adjusted annually for inflation.
A person who willfully violates the BOI reporting requirements may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000. Potential violations include willfully failing to file a beneficial ownership information report, willfully filing false beneficial ownership information, or willfully failing to correct or update previously reported beneficial ownership information.
These penalties can be imposed against the beneficial owner, the entity, and/or the person completing the report.
What should I do if the reported information changes?
Should any of the reported information change or a beneficial ownership interest be sold or transferred, the entity must report this information within 30 days of the change or face the potential of having the penalties described above imposed. Changes include reporting a beneficial owner’s change of address or name. These require resubmitting updated IDs to reflect the address or name changes.
How do I file a Beneficial Ownership Information Report?
To report to FinCEN, you will do so electronically through a secure filing system available via FinCEN’s BOI E-Filing website: https://boiefiling.fincen.gov. You can download the PDF version and fill it out to be uploaded or use the online version. Once submitted, you can download a copy to keep for your records.
Is there a fee for this report?
There is no fee to file this report with FinCEN. If you decide to use a third party to file this report on your behalf, fees may apply.
When should this report be filed?
For reporting companies that were created before January 1, 2024, this information must be reported to FinCEN by January 1, 2025.
For reporting companies created on or after January 1, 2024, you have 90 days to file this information.
For reporting companies created on or after January 1, 2025, you have 30 days to file this information.
Complete your Beneficial Ownership Information Report
If you have questions about filing your BOI report, the tax team at Chatterton & Associates can help you navigate this process or any other tax concerns you may have as a business owner. Please contact us today to discuss your business financial situation.
Sincerely,
The Team at Chatterton & Associates
