Beneficial Ownership Information (BOI) Reporting: What You Need to Know

BOI, or Beneficial Ownership Information Reporting, is now a must-do for most businesses. If you don’t follow the rules, you could face a $10,000 fine and up to two years in prison. Also, if someone breaks the BOI reporting rule on purpose, they could get a civil fine of $591 for each day they don’t follow the rules.

I don’t like this new rule either, but it’s here, and it’s important to understand it. In this blog post, I’ll answer common questions about BOI reporting that you need to know.

If you want to know how to file a BOI Report, you can check out my video where I show you how to file a BOI Report in about five minutes Step-By-Step.

Recent Legal Challenges

You might have heard about a lawsuit where a US District Court ruled that the BOI reporting was unconstitutional. The court said it went beyond Congress's powers. But, this ruling only applies to the members of the National Small Business United Group. For everyone else, BOI reporting is still required.

If you have a business, you won't want to miss this information. Share it with anyone else who has a business too. This info is important even if you’ve already filed your BOI Report.

Hi, I’m Noel Lorenzana. I’m an Accountant, not a lawyer, and this isn’t legal advice. I’m just someone on the internet trying to help you out. Let’s dive in.

What is the Beneficial Ownership Information (BOI) Reporting?

The new Corporate Transparency Act says small businesses with fewer than 20 employees must report their Beneficial Owner Information to FinCEN (Financial Crimes Enforcement Network), or face a $500 per day penalty. In serious cases, the fines can go up to $10,000, and individuals might face up to two years in prison. This rule started on January 1, 2024. Even though I don't like it either, it’s here, and you need to follow it. Note, the $500 per day fine is now $591 per day due to inflation.

Who Needs to Report?

Corporations, limited liability companies (LLCs), and other entities created by filing a document with a Secretary of State or similar office in the US need to report. This includes foreign companies registered to do business in the US. So, if you registered your Corporation or LLC with a Secretary of State, you probably need to report your BOI.

Do Sole Proprietorships Need to Report?

No. Unless a sole proprietorship was created in the US by filing a document with a Secretary of State or similar office, it doesn’t need to report BOI information.

Who is a Beneficial Owner?

A beneficial owner is an individual who either directly or indirectly controls a reporting company or owns at least 25% of it. Beneficial owners must be individuals, not trusts, corporations, or other legal entities.

Common Mistakes in BOI Filings

Common mistakes include not providing complete information about all beneficial owners, not keeping the information updated, submitting incorrect data, and missing deadlines. You should update your BOI information whenever there’s a big change in ownership or control of your business. This usually needs to be reported within 30 days of the change.

What to Do if Information Changes

If there's any change to the required information about your company or its beneficial owners in a BOI report, your company must file an updated report no later than 30 days after the change. This includes changes to beneficial owners or their details.

Do I Need to Submit a New BOI Report for Updates?

Yes, updated BOI reports require all fields to be submitted, including the updated information. Save a copy of your original BOI report to make updates easier in the future.

Who is a Company Applicant?

Only companies created or registered on or after January 1, 2024, need to report their company applicants. This usually includes up to two people who could qualify as company applicants.

What Information Must Be Reported?

For each beneficial owner, a company must provide the individual's name, date of birth, home address, and an identifying number from a passport or US driver's license, along with an image of the ID document.

Is There an Annual Reporting Requirement?

No, there is no yearly reporting requirement. Companies must file an initial BOI report and updated or corrected reports as needed.

Filing Deadlines

• Companies existing before January 1, 2024, must file by January 1, 2025.
• Companies created in 2024 must file within 90 days of creation.
• Companies created or registered on or after January 1, 2025, must file within 30 days of creation or registration.

What if I Find an Inaccuracy?

If a BOI report is inaccurate, your company must correct it within 30 days of becoming aware of the mistake.

Penalties for Not Following the Rules

A person who willfully breaks the BOI reporting rules may face civil penalties of up to $591 per day and criminal penalties, including up to two years of imprisonment and a fine of up to $10,000. Both individuals and companies can be held responsible for breaking these rules.

Who Can Access BOI Information?

FinCEN can share BOI information with federal agencies involved in national security, intelligence, or law enforcement, as well as federal regulatory agencies. State, local, and tribal law enforcement agencies can also request BOI information from FinCEN under certain conditions.

Conclusion

Staying on top of BOI reporting is very important for all businesses. Make sure you understand the rules, keep your information up to date, and meet all deadlines to avoid serious penalties. For more info, visit FinCEN's website at fincen.gov/boi and read the full FAQ at fincen.gov/boi-faqs.

By staying informed and prepared, you can handle the BOI reporting rules and protect your business from potential legal problems.