Starting next year, a vast number of small businesses will need to submit a BOI report to the Financial Crimes Enforcement Network (FinCEN), a division of the U.S. Department of Treasury. It is essential to be aware that non-compliance may result in significant civil and criminal penalties, which could even lead to imprisonment.

The BOI reporting requirement is an anti-money laundering initiative enacted through the Corporate Transparency Act, P.L. 116-283, in 2021 that mandates BOI be reported to FinCEN. The requirement would apply to most companies.

The BOI reporting a critical step towards implementing the Corporate Transparency Act, which will help the Treasury Department and FinCEN expose bad actors abusing the U.S. financial system by hiding their identity behind opaque corporate structures.

Do You need to File?

If your business is a corporation (S corp or C corp) or a limited liability company (LLC), you may need to file a BOI report, unless you qualify for an exemption. Key factors include whether you had to file any documents during the formation of your company with the secretary of state or similar offices. The Corporate Transparency Act outlines 23 exemptions, including criteria like having over 20 full-time employees and more than $5 million in gross receipts.

Filing Date?

Reporting companies created or registered on or after January 1, 2024, will have 30 days after receiving notice of their company’s creation or registration to file their initial BOI reports. Reporting companies created or registered to do business before January 1, 2024, will have additional time — until January 1, 2025 — to file their initial BOI reports.

What needs to be Reported?

Beyond basic business details, the BOI report mandates the inclusion of personal information for each beneficial owner of the company. A beneficial owner can be any individual with substantial control or ownership (at least 25%) over the reporting company. Specific details such as names, birthdates, home addresses, and more are required.

Updates and Corrections

Should there be any changes in the reported details or if inaccuracies are identified post-submission, you have a 30-day window to update or correct the information with FinCEN.

The Small Entity Compliance Guide

The Small Entity Compliance Guide, which FinCEN posted Monday, describes each of the BOI reporting rules provisions; answers key questions; and provides interactive checklists, infographics, and other tools to assist businesses with compliance.  The guide addresses six key questions for complying with the BOI reporting rule:

• Does my company have to report its beneficial owners?
• Who is a beneficial owner of my company?
• Does my company have to report its company applicants?
• What specific information does my company need to report?
• When and how should my company file its initial BOI report?
• What if there are changes or inaccuracies in reported information?

 

The Small Entity Compliance Guide:
BOI Small Compliance Guide (fincen.gov)