Dealing with the new Beneficial Ownership Information report requirements

(This is not legal advice and should be taken as educational information only.  

Please consult your professional attorney or CPA for your specific business needs)

This could be a long discussion or a short one so for the sake of everyone’s time, I have consolidated this topic into a brief overview.

Filing your Beneficial Ownership Information (BOI) Report with FinCEN (Financial Crimes Enforcement Network) is an important step for certain business entities to comply with U.S. regulations. In 2024, the requirements have evolved, so it’s crucial to stay informed and compliant. 

As this is an evolving process, we recommend that you use a professional legal service.  Here is a link to our preferred partner.  Click Here

Here’s a simplified, step-by-step guide to help you navigate the process:

Step 1: Determine If You Need to File & by WHEN

Not all businesses need to file a BOI report. Typically, it applies to corporations, LLCs, and other entities created by a filing with a state or tribal authority. There are exemptions, such as publicly traded companies, certain regulated entities, and specific others. Make sure your business falls within the scope of entities required to report.

Who is exempt: 

1. Publicly Traded Companies: Businesses that are already reporting to the U.S. Securities and Exchange Commission (SEC) are exempt, as their ownership and financial information are publicly available.
2. Governmental Entities: This includes entities established under the laws of the United States, a state, or a political subdivision of a state, or under an interstate compact between two or more states, that exercises government functions.
3. Banks and Financial Institutions: Banks, credit unions, and other entities that are regulated by a federal or state agency fall under this exemption. This includes certain investment and insurance companies that are already subject to regulatory oversight.
4. Accounting Firms: Certified public accounting firms that are registered or licensed under state laws are exempt due to their professional regulation and standards.
5. Public Utilities: Companies that provide essential services, such as water, gas, and electricity, and are regulated by a state or federal utility commission.
6. Tax-Exempt Entities: Organizations that are exempt from taxation under the Internal Revenue Code, such as 501(c) organizations, including charities, religious organizations, and other nonprofit entities.
7. Certain Trusts: Trusts that are not created through a filing with a state office (e.g., certain family trusts) are exempt, especially those not used for business purposes.
8. Larger Operating Companies: Entities that employ 20 or more, regular, full-time employees in the United States, have an operating presence at a physical office within the U.S., and file income tax returns in the U.S. demonstrating more than a specified amount of gross receipts or sales.

Deadlines:

The deadlines for filing the Beneficial Ownership Information (BOI) report with FinCEN can vary based on specific circumstances surrounding your business entity. However, as of the information available up to my last update in April 2023, here’s a general overview of what you can expect regarding deadlines:

1. For Newly Formed Entities: Entities created after the implementation of the BOI reporting requirements are typically required to file their report within a specific timeframe after their creation. The exact period can vary, but it’s often within 30 days of receiving notice of their creation from the relevant state or tribal authority.  In 2024, you will have 90 days, in 2024, you will need to file within 30 days.
2. For Existing Entities: Entities that were already in existence when the BOI reporting requirements went into effect have a different deadline. They were given a longer period to comply, usually a set date by which all existing entities must submit their initial BOI report. This deadline is currently, December 31^st, 2024.
3. Upon Changes in Beneficial Ownership: If there are any changes in the information previously reported, such as a change in beneficial ownership or contact details, entities are required to file an updated report within a specified timeframe from the date of change. This period is often 30 days but can vary based on the regulation.
4. Annual Updates: Depending on the specific regulations and requirements, some entities might need to file annual or regular updates to their BOI reports. The specifics of these requirements, including deadlines, would be outlined by FinCEN.

Important Notes:

• Check for Updates: Since regulations and requirements can evolve, it’s important to stay informed about any changes to the filing deadlines or requirements. FinCEN’s website and official communications are authoritative sources for this information.
• Specific Dates: The general guidelines provided here are based on the framework established by the Corporate Transparency Act and subsequent FinCEN rules. For the exact deadlines applicable to your entity, refer to the most recent guidelines provided by FinCEN.
• Penalties for Non-compliance: Failing to file a BOI report by the deadline can result in penalties, including fines of up to $500 per day! It’s crucial to adhere to the reporting deadlines to avoid such consequences.

Step 2: Gather Required Information

You’ll need to collect detailed information about your company and its beneficial owners. Beneficial owners are individuals who, directly or indirectly, own or control a significant percentage (usually 25% or more) of the entity or have significant control over it. For the report, you’ll need:

• Legal name of the business
• Trade or DBA (Doing Business As) names
• Physical and mailing addresses
• TIN (Taxpayer Identification Number) or EIN (Employer Identification Number)
• Date of formation and jurisdiction
• Names, dates of birth, addresses, and unique identifying numbers (such as a driver’s license or passport number) for all beneficial owners

Step 3: Access the FinCEN Reporting Portal

FinCEN has a reporting portal designed for submitting BOI reports and other related filings. If you haven’t used the portal before, you will need to create an account. Go to the FinCEN website and look for the registration or login page for the BOI Reporting Portal.

Step 4: Complete the BOI Report

Once you’re logged into the portal, select the option to file a new BOI report. The online form will guide you through entering the information you gathered in Step 2. Ensure all information is accurate and complete. You may also be required to provide documentation that verifies the information you’re submitting.

Step 5: Review and Submit

Before submitting, double-check all the information for accuracy. Incorrect or incomplete filings can lead to delays or penalties. Once you’re sure everything is correct, submit the report.

Step 6: Keep Records

After submission, you’ll receive a confirmation. Keep a copy of this confirmation and any other related documentation for your records. It’s important to have proof of compliance should it ever be requested by regulatory authorities or financial institutions.

Additional Tips:

• Stay Informed: Regulations can change, so it’s important to stay updated on any amendments to the filing requirements or deadlines.
• Deadlines: Pay close attention to the filing deadlines to avoid penalties. The specific due date for your BOI report can vary based on factors like when your entity was created or when significant changes in ownership occurred.
• Seek Help if Needed: If you’re unsure about any part of the process or your obligations, consider consulting with a legal advisor or accountant who specializes in business compliance.

Remember, filing your BOI report is not just about regulatory compliance; it’s also part of broader efforts to enhance transparency and combat financial crimes like money laundering and fraud. Keeping your filings accurate and up-to-date is essential for your business’s legal standing and reputation.