With the Corporate Transparency Act passed in 2021 by Congress, comes new regulations required by the U.S. government. A new requirement is Beneficial Ownership Information (BOI) Reporting. To stop fraud and embezzlement within the United States; all Corporations, Limited Liability Companies (LLC), and any companies that were created by filing a document with a Secretary of State or similar office will be required to report the individuals and entities that directly or indirectly are responsible for owning or controlling them. It is important to note that not all businesses are required to file the BOI report. If you are an owner of a Sole Proprietorship, Partnership, or have just filed an Assumed Business Name with the Secretary of State you do not need to file this new, mandatory report.
Identifying who the beneficial owners of the company are can be difficult, but there are a few rules in place that can help narrow down who needs to be included in your BOI report. Firstly, you should ask yourself who either directly or indirectly exercises substantial control over the company or who owns at least 25% of the company’s interest. An individual who exercises substantial control is either a senior officer, an individual who has the authority to appoint or remove officers and directors, or an individual who has the authority to make important decisions within the company.
Another important aspect of BOI reporting, but only for entities created after January 1st, 2024, is reporting the company applicant. If you have an existing company, then the company applicant does not need to be identified and will not need to be reported in your filing. The company applicant is the person directly responsible for filing the document that created or registered the entity.
To avoid the penalties that are associated with this mandatory reporting you need to know when you are required to complete this filing. The fees are steep at $591 a day for willfully failing to file the report, so making sure the BOI report is filed on time is very important. If you have an existing company, meaning created before January 1st, 2024, then the initial BOI report is due on or before January 1st, 2025. If you create a company during the 2024 calendar year, then the initial report is due within 90 calendar days. Finally, if you create a company during the 2025 calendar year, then the initial report is due within 30 calendar days.
This is not a required annual report. It is a one-time filing that will only need to be updated if there is a change in your company. The changes that would require an update to your initial filing are things like change in ownership, change in management, change in business address, etc. If you want to read more on BOI reporting a good introductory resource is: An Introduction to Beneficial Ownership Information Reporting
Another great resource if you want to know more about BOI reporting was released by U.S. Department of the Treasury Financial Crimes Enforcement Network and can be found here: Beneficial Ownership Information Frequently Asked Questions The website to file this report is https://boiefiling.fincen.gov/ and the information required is as follows:
1. Company EIN or your SSN, legal name, and address.
2. If date of creation is on or after January 1st, 2024, then the company applicant’s information would be needed – a clear image of either the front and back of their driver’s license, US passport, or a state issued ID.
3. A list of every beneficial owner and a clear image of either the front and back of their driver's license, US passport, or a state issued ID.
4. A FinCEN number if that has been provided to you (this is not applicable to everyone).
If you have any questions or if you would like Parker Advisors to file your Beneficial Ownership Information Report for you, please contact kailee@parker-advisors.com. We can’t wait to hear from you!