Business owners, get ready! The U.S. government will soon require many businesses, Limited Liability Corporations (LLCs), and Corporation owners, to disclose ownership with a new report called BOI.
BOI report stands for Beneficial Ownership Information Report.
The reporting is part of the Corporate Transparency Act (CTA). This requirement by the federal government intends to curb money laundering, drug trafficking, and financial fraud, among others. Before the CTA, there were no uniform beneficial reporting requirements in the United States, which makes it difficult for law enforcement to investigate possible crimes. The U.S. Congress knows some illicit actors use corporate structures such as shell and front companies to hide their identities and move money through the U.S. financial system.
Attorney Marcos E. Garciaacosta presents you with the lowdown for this new requirement:
Who is Required to Comply?
The BOI reporting will affect many LLCs, corporations, and entities registered to do business in the USA. Companies with more than 25 full-time employees are not required to fill this new report, as other requirements are in effect. The small companies must fill the BOI report with the Financial Crimes Enforcement Network (FinCEN). The report aims to identify the persons who own and have control of the company.
The requirement will go into effect on January 1, 2024
“Companies and LLC owners should not feel intimidated by this new requirement of BOI reporting,” said business attorney Marcos E Garciaacosta. “This requirement would not affect your company’s operations and would help eliminate bad actors who take advantage of our system. We all benefit when there is transparency and accountability in business.”
What is Considered a Reporting Company?
A domestic or foreign corporation, LLC, or other entity created by a document with a Secretary of State under a State in the Union or a Tribal Government. A beneficial owner is any individual who, directly or indirectly,
- either exercises substantial control over the company or
- owns or controls at least 25% of the ownership interests of a reporting company.
- Exemptions will be corporations of more than 25 full-time employees who file additional reports for their operations.
What information is required for each reporting company?
For the reporting company:
- The full legal name
- Trade name or “doing business name,” if any
- The address of the entity’s principal place of business
- The jurisdiction of formation
- The entity’s taxpayer identification number (TIN) or employer identification number (EIN)
For every beneficial owner:
- The full legal name of the individual
- The DOB
- Company’s business address
- Individual’s residential address
- A unique I.D. number for the individual, such as a driver’s license or passport number
- An image of the document from which the I.D. number was obtained
When is the Due Date for Filing the BOI?
Corporations and LLCs created or registered before January 1, 2024, must file the BOI report by January 1, 2025. Corporations and LLCs created or registered after January 1, 2024, will have 30 days after receiving notice of their creation or registration to file the BOI report.
Are there penalties involved for not filing the BOI?
Yes, and they are significant for small business owners. The civil penalty will be $500 per day with potential criminal penalties of up to $10,000 and jail.
How will Privacy be Protected?
FinCEN will publish regulatory guidance that will establish rules for who may access the BOI reporting, for what purposes, and secure systems.
How Do You File?
FinCEN is designing and building the Beneficial Ownership Secure System to collect and store CTA reports. This system is not yet available. We will let you know when to start filing the report and where.
We are Here to Help You
Business Attorney Marcos E. Garciaacosta will be ready to assist you in fulfilling all government requirements. If you have any questions, please schedule a consultation at (480) 324-6378.