Starting this year, business owners have a new filing requirement to add to their to-do list. Business entities created before January 1, 2024 will need to file a Beneficial Ownership Information (BOI) Report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) by December 31, 2024. Any entity created in 2024 will need to file a report within 90 days of creation with the Secretary of State. The purpose of this Act is to help the government prevent individuals from engaging in illegal activities such as money laundering, tax fraud, and financial terrorism. If you own, or have substantial control in, an LLC, Corporation, or other similar entity, you will likely need to file a report. This Act also applies to foreign entities that are registered to do business in the United States.
Failure to submit a report by the December 31, 2024 deadline could result in harsh penalties. The penalty for not reporting by the deadline is a $591/per day fine. Business owners that willfully choose not to file a report could owe a $10,000 fine and could spend up to 2 years in prison.
The report consists of two groups of information. The first is information about the entity, the second is information about the owners and those with substantial control of the entity. The information that will be required for each entity is listed below:
- Full legal name
- Any trade name or “doing business as” (DBA) name
- Complete current U.S. address
- State, Tribal, or foreign jurisdiction of formation
- IRS Taxpayer Identification Number (TIN) or Employer Identification Number (EIN)
- For foreign reporting companies only – State or Tribal jurisdiction of FIRST registration
The information required for owners depends upon how much interest and how much control each owner has in the entity. A beneficial owner is anyone who exercises substantial control over a reporting entity or owns (or controls) at least 25% of the ownership interests. Individuals that own less than 25% of an entity, but are exercising substantial control, such as managers, will still need to be reported.
The reporting requirements do not provide exceptions for entities owned by trusts or other entities. Each entity will need to file its own report, and each trust will need to provide the names of the beneficiaries and the trustee of the trust.
The information required for EACH beneficial owner or person with substantial control is listed below:
- Full legal name
- Date of birth
- Complete current address
- The unique identifying number on, the jurisdiction it is issued from, and an image of one of the following valid and non-expired documents:
- S. Passport
- State driver’s license
- Identification document issued by a state, local government, or tribe
- If the individual does not have any the previously listed documents, a foreign passport
Every entity that is required to file an initial report will be required to provide updates should the information change. If your entity has a change to the required information that has been reported for either the entity or the beneficial owners (and those with substantial control), the entity must file an updated report within 30 days of the date of the change. This would include changes such as adding any alternative names to the entity, a change in the beneficial owners or those who have substantial control, and any changes to the personal information of beneficial owners and those who have substantial control (legal name, address, driver’s license number, etc).
Please note that if you realize you have made a mistake on your filed report, you must correct it no later than 30 days after learning of the inaccuracy.
Certain entities are not required to file a report. Most of the exemptions are for financial service companies, large companies, and tax exempt entities. If your entity does not fall under one of the exemptions, your entity is considered to be a reporting entity. Reporting entities created prior to 2024 will need to file a report by December 31, 2024. Those entities created in 2024 must file a report within 90 days. If your entity becomes an exempt entity after you file your initial report, you will need to file an updated report indicating that the entity is now exempt. If you have questions about whether you are a reporting entity or what information is required to be filed, our office has specially trained staff to help your business with these filings.