Beneficial Ownership Information (BOI) Report: What it May Mean To You
The Financial Crimes Enforcement Network (FinCEN) is now requiring many companies doing business in the United States to provide identifying information about the company, its beneficial owners, and company applicants.
Reporting companies formed before January 1, 2024 have until January 1, 2025 to report their required information. Reporting companies formed on or after January 1, 2024 have 90 calendar days from formation or registration to provide information. Reporting companies is broadly defined but generally will include most small businesses that have less than 21 full-time employees and less than $5 million in gross receipts.
Your WBL Advisors are able to assist you with understanding these new rules. Non-compliance could result in significant criminal penalties, so we encourage you to determine whether the reporting requirements relate to your entity and make a plan to timely comply. WBL is not responsible for filing reports or determining specific filing requirements of any entity unless done so in connection with a separate written engagement letter. Since all but brand new entities have the entire 2024 calendar year to comply, we will send out another email and post a reminder on our website towards the end of October.
As a result of the Corporate Transparency Act passed by Congress in 2021, many entities doing business in the United States are now required to provide identifying information about the company, the beneficial owners, and in some cases, the company applicants. The intended purpose of this report, submitted to the Financial Crimes Enforcement Network (FinCEN), is to minimize illicit financial activities.
Entities required to report, called "reporting companies", have to report information about beneficial owners to FinCEN if they are (1) a corporation, LLC, or other entity type that was created in the United States by filing a document with a secretary of state or similar office under the law of a state or Indian tribe; or (2) a foreign company that registered to do business in any U.S. state (or Indian tribe) by filing a document with the secretary of state or similar office.
A beneficial owner is an individual who directly or indirectly either exercises substantial control over the reporting company or owns or controls at least 25% of the reporting company's ownership interests. An individual who exercises substantial control is a senior officer, has authority to appoint or remove certain officers, is an important decision maker, or has any other form of substantial control.
There are 23 named exemptions from this reporting requirement, including most nonprofit organizations. In addition, "large" operating companies that have more than 20 full-time employees and gross receipts in excess of $5 million are generally exempt from filing.
The report is filed securely online by going to boiefiling.fincen.gov. If the reporting company was formed or registered prior to January 1, 2024, the BOI (Beneficial Ownership Information) report is due by January 1, 2025. If the reporting company was formed between January 1, 2024, and December 31, 2024, the BOI report is due within 90 calendar days of formation or registration. If formed on or after January 1, 2025, the report is due within 30 days of formation or registration.
The BOI report is a one-time filing, unless the information needs to be updated or corrected (e.g., change in CEO). Any updates or corrections must be submitted within 30 days. Non-compliance could result in penalties of up to $500 per day for each day the violation continues, or up to two years imprisonment and a fine of up to $10,000.
For more information, please visit https://fincen.gov/boi. WBL Advisors are available to answer general questions with respect to BOI reporting, but it is important to note that WBL is not responsible for filing reports or determining specific filing requirements of any entity unless done so in connection with a separate and written engagement letter.