Broker Check

Beneficial Ownership Information Reporting Obligations for Small Business

February 13, 2024

Starting Jan. 1, 2024, most companies created in or registered to do business in the U.S. must report information on their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) under the Corporate Transparency Act (CTA). Failure to comply can lead to criminal penalties of imprisonment for up to two years and/or a fine of up to $10,000, and a civil penalty of up to $500 per day.

When is the Beneficial Ownership Information Report deadline?

A company created or registered to do business before January 1, 2024, will have until January 1, 2025, to file its initial beneficial ownership information report.

A company created or registered on or after January 1, 2024, and before January 1, 2025, will have 90 calendar days after receiving notice of the company’s creation or registration to file its initial BOI report. This 90-calendar day deadline runs from the time the company receives actual notice that its creation or registration is effective or after a secretary of state or similar office first provides public notice of its creation or registration, whichever is earlier.

Companies created or registered on or after January 1, 2025, will have 30 calendar days from actual or public notice that the company’s creation or registration is effective to file their initial BOI reports with FinCEN.

 

What is Beneficial Ownership Information (BOI)?

Beneficial ownership information refers to identifying information about the individuals who directly or indirectly own or control a company.

In 2021, Congress passed the Corporate Transparency Act. This law creates a new beneficial ownership information reporting requirement as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.


Who will be required to report BOI?

Companies required to report are called reporting companies. There are two types of reporting companies:

  1. Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
  2. Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.

There are 23 types of entities that are exempt from the reporting requirements.

Source: https://www.fincen.gov/boi

 

How to file the BOI report?

 

Step 1:

Go to: https://boiefiling.fincen.gov/

Step 2:

 

Step 3:


What information should I collect about my company, its beneficial owners, and its company applicants?

The following checklists may help you identify the information about your company and its beneficial owners and company applicants that you are required to collect and report.


Required information checklists - Reporting Company

  1. Full legal name
  2. Complete current U.S. address
  3. State, Tribal, or foreign jurisdiction of formation
  4. Internal Revenue Service (IRS) Taxpayer Identification Number (TIN)


Required information checklists - Each Beneficial Owner and Company Applicant

  1. Full legal name
  2. Date of birth
  3. Complete current address
  4. Unique identifying number and issuing jurisdiction from, and image of, one of the following non-expired documents:
    • U.S. passport
    • State driver’s license
    • Identification document issued by a state, local government, or tribe
    • If an individual does not have any of the previous documents, foreign passport



Key Takeaways: 

Being a business owner, it is crucial to stay on top of regulatory and legislative requirements. That's why we would like to highlight the importance of the Beneficial Ownership Information Report. It's a good idea to chat with your CPA about this.

Of note, if you have set up any entities or trusts for your personal financial planning purpose, now it is the time to have a thorough review and start pulling together the info you'll need for reporting in 2024. Also, if you're thinking about creating new entities for personal planning, it may be beneficial to consider whether you could repurpose any existing ones instead.

Questions? We are always here to help! Just drop a line at info@taurus-fin.com, and we'll sort it out together.

*Taurus Financial and LPL Financial do not provide legal advice or services.  Please consult your legal advisor regarding your specific situation.