Beneficial Ownership Information Reporting Requirements

By John Doe
April 24, 2024
2:45 p.m.


Complying With Beneficial Ownership Information Reporting Requirements

Starting from the first day of 2024, a significant number of small businesses in the United States will need to submit a report on their beneficial ownership to the Financial Crimes Enforcement Network (FinCEN), which is part of the U.S. Department of Treasury. Know about the CTA Corporate Transparency Act. It's crucial to note that non-compliance could lead to severe civil and criminal penalties, including substantial fines such as a $500 per-day infraction and potentially imprisonment for those responsible. Learn here about Ultimate Beneficial Ownership.

For those unfamiliar with the requirements of Beneficial Ownership Report information (BOI) reporting, or for those who have heard of it but are unclear about the specifics, it's important to stay informed. The following discussion aims to clarify whether your small business needs to file a BOI report, what implications this has for your enterprise, and the implications for its owners or principal managers. Anti-Money Laundering This guidance is derived from the Corporate Transparency Act, FinCEN's official regulations, and their public communications regarding Beneficial Ownership Information Reporting.

Does My Business Need to File a Beneficial Ownership Information Report?

If you have established a corporation, either as an S corp a C corp, or a limited liability company (LLC), you'll need to file a Sole Beneficial Ownership information (BOI) report unless you qualify for one of the exemptions outlined by the Corporate Transparency Act. Specifically mentioned in the regulations are corporations and LLCs, but the requirement to file may extend to other business structures depending on whether their formation involved filing documents with the secretary of state or a similar entity. FATF - Financial Action Task Force While sole proprietorships and most general partnerships are likely exempt, as they typically do not file such formation documents, this is not explicitly stated in the rule.

The Corporate Transparency Act 2023 provides for 23 exemptions, including one for "large operating companies." Your corporation or LLC may be exempt if it has more than 20 full-time employees, gross receipts exceeding $5 million, and a physical office within the U.S. Certain entities that were inactive before January 1, 2020, may also be exempt.

Other exemptions apply to entities that are already subject to government regulation and, as a result, disclose their Beneficial Ownership Information. These entities include publicly traded companies, financial institutions, insurance companies, public accounting firms, charitable organizations, and public utilities subject to regulation. While many small corporations and LLCs may not meet the criteria for these exemptions, it’s vital to review all 23 to determine with certainty whether your company is required to file a Reporting of beneficial ownership.

How Can I File the BOI Report?

As the owner of a small business that is classified as a "reporting company" under the new regulations, you are required to submit a Meaning of beneficial ownership information (BOI) report between January 1, 2024, and January 1, 2025. This gives you a full year to comply with the reporting requirement that kicks in at the start of 2024. Anti-money laundering compliance For businesses that are established on or after January 1, 2024, the BOI report must be filed within 30 days following the notification of their formation.

This BOI report should be submitted to the Financial Crimes Enforcement Network and will be done electronically via a dedicated filing system. Importantly, our third-party organization is standing by to take care of this filing on your behalf. It is also worth noting that this requirement is at the federal level, so you will not need to file a separate report for your state. Know What is AML?

What Information Must I Report to FinCEN?

The beneficial ownership information (BOI) report that you will submit for your company will provide FinCEN with essential details about your business. What is an Entity Beneficial Owner for an LLC? This includes the legal name of your company, any names under which it does business (also known as "doing business as" or d/b/a names), the address of the company, the jurisdiction in which it was formed, and its taxpayer identification number.

As a business owner, it is particularly crucial for you to note that you will need to supply FinCEN with personally identifiable information for each individual who qualifies as a Beneficial owner basics of the reporting company. Know about the Beneficial Ownership information guide. A beneficial owner is defined as any person who either directly or indirectly has significant control over the company or owns or controls at least 25 percent of the company.

For every Know about the Beneficial Owner, the report must include their legal name, date of birth, residential address, and identification number from an acceptable document such as a driver's license, state ID, or passport, along with an image of the identification document. PIL Personally Identifiable Information. Additionally, for companies that are formed on or after January 1, 2024, information about the individuals who filed the company's formation documents (referred to as company applicants) must also be provided in the BOI report within 30 days

What if the Info I Reported Changes/I Realize it Was Not Accurate?

Should there be any changes in the information previously reported to FinCEN about your company or its Beneficial Owner for an LLC., or if there's a shift in the individuals who are the beneficial owners, you are required to file an updated report with FinCEN within 30 days of this change. (Our organization can also take care of the refiling process for you.) Beneficial Ownership Secure System. This can ensure that the records are kept current and reflect the accurate state of ownership and control of the company.

Furthermore, if you discover any inaccuracies in the beneficial ownership information (BOI) report initially filed for your company, you must submit a corrected report to FinCEN. What is the FATF report? This correction must take place within 30 days from the date you identified or should have identified the error. Maintaining accurate records is crucial as it fulfills your legal obligations and ensures transparency about the ownership structure of your business. Want to know What is the NSBA?

Who Can View My Filed BOI? Can FinCEN Keep it Private?

The Corporate Transparency Act restricts the accessibility of Want to Know What is Ultimate Beneficial Ownership information (BOI) to specific authorized entities, known as "requestors." These include federal law enforcement and national security agencies, state and local law enforcement agencies (provided they have a court order), the Treasury Department itself, financial institutions (but only with the reporting company's explicit consent), and government agencies tasked with the oversight of financial institutions.

Additionally, FinCEN has a mandate to put in place stringent protocols to protect this sensitive BOI. Financial Action Task Force This entails the establishment of a robust system for safeguarding BOI (Business Operation Information) and the formulation of protocols that guarantee access is restricted to authorized individuals and exclusively for lawful purposes. The protection of this data is a critical aspect of the Corporate Transparency Act, ensuring that while transparency is maintained, the misuse or unauthorized disclosure of sensitive information is prevented.

How Does Beneficial Ownership Reporting Affect the Owners of Small Businesses?

It is clear that the forthcoming requirement for reporting What are Beneficial Owners? information will have considerable implications for many small business owners. If you are a small business owner, it is important for you to determine whether your business is subject to this reporting requirement. If it is, you will need to disclose the personal details of the individuals who have substantial control or own a significant portion of your company. This information will be securely stored in a federal database. Visit the website & get more details BOIFilings.

Additionally, you will need to diligently monitor and maintain records of all reported information and ensure you submit updated reports to FinCEN if there are any changes. NSBA, The National Small Business Association? You'll also need to make critical decisions, such as choosing the timing of your filing and considering when to file the report through our third-party service to handle the filing on your behalf. By addressing these requirements proactively, you can be well-prepared for when this significant new legal obligation comes into effect. Customer Due Diligence for Business Owners. Adherence to these rules is crucial, not only for regulatory compliance but also to avoid the severe penalties that the Corporate Transparency Act imposes for non-compliance

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