2024 BOI Reporting Requirements: Your Most Common Questions Answered!

Feeling a bit perplexed by the requirements surrounding BOI reports and their implications for your business? You're not alone. As per the CTA Act, effective January 31, businesses are now mandated to submit the Beneficial Ownership Information (BOI) report to FinCNE. Failure to adhere to this could result in facing civil and criminal penalties.

We've been fielding numerous questions from clients and acquaintances alike about BOI reports. Are you uncertain whether you need to file one? Confused about who qualifies as Beneficial Owners? And, naturally, when is the looming deadline?

Take a moment to breathe. In this blog post, we'll delve into these pressing questions about BOI reports using clear, straightforward language.

Let's begin with the essentials.

What is a BOI Report?

The BOI Report, also known as the Beneficial Ownership Information Report or BOIR, is a comprehensive report that details a company's ownership structure, focusing on individuals who have considerable power.

This report contains significant information, including the names and personal information of individuals who control or influence the firm. It's a comprehensive document that reporting organizations are required to submit to the Financial Crimes Enforcement Network (FinCEN), an agency of the United States Department of the Treasury.

How do you tell whether your company qualifies as a "Reporting Company"?

A firm that is required to report the BOI of beneficial owners is known as a Reporting company. To find out if your company needs to declare its ownership details, check if it falls into the following categories: Domestic or foreign entities.

1. Domestic Entities: - These businesses are formed by filing paperwork with US state authorities. Corporations, limited liability companies, and partnerships are examples of business entities.

2. Foreign Entities: - The businesses Set up outside the US. - Must submit paperwork with state authorities to operate in the US.

If your company falls into either category, it must provide Beneficial Ownership Information.

Which entities are exempt from submitting BOI reports?

FinCEN has identified 23 specific types of businesses/entities that are exempt from reporting BOI. For further information, please see the table below.

Who are Beneficial owners?

FinCEN defines beneficial owners as those who, either directly or indirectly:

1. Control Reporting Companies:

They exercise power or authority over the reporting company's decisions. This could include holding significant positions such as president, CEO, CFO, or General Counsel.

2. Own or control 25% or more:

These are individuals who hold or control at least 25% of the reporting company's ownership stake. This category encompasses stockholders, partners, LLC members, and business owners who hold shares in another business subject to BOI reporting requirements.

What Information is Required in the Beneficial Ownership Information (BOI) Report?

Business entities must provide the following information on their BOI Report:

1. Beneficial Owner Details:

   - Name

   - Address

   - Date of Birth

   - Unique ID number (e.g., Driving License or Passport number) for each beneficial owner.

2. Reporting Company Information:

   - Business Name

   - Business Address

   - Registered agent details

   - Tax ID number for the business

3. Type of BOI Filing:

   - Specify whether it is an initial BOI filing, a correction, or an update.

4. Information for Newly Created Businesses:

   - Additional details about the company applicants for businesses that have recently been established should be included in the report. Information includes:

- Name and Date of Birth of the Company Applicants

- Address

-  Unique Identification number and issuing jurisdiction  from one of the following

a U.S. passport, An identification document issued by a State, local government, or Indian Tribe to identify the individual, a State-issued driver’s license, or a Foreign document if the other documents are unavailable.

Who is the Company applicant?

The term "company applicant" refers to an individual or entity responsible for filing documents to establish or register a firm with state authorities, Indian tribes, or other US jurisdictions.

For instance, if your business is located in Florida and was created after January 1, 2024, the company applicant is responsible for filing the Articles of Incorporation with the Florida Department of State.

While a company applicant can be either an individual or an entity, a business is limited to a maximum of two company applicants. In cases involving multiple individuals or entities in the establishment process, the primary entity or individual leading the filing or control procedure will be designated as the company applicant.

Do I need to report the company applicant details for my business?

Not all businesses are required to report the Company Applicant details. Reporting the company applicant details is mandatory only for businesses established on or after January 1, 2024. Entities formed prior to this date are not required to provide this information to FinCEN.

When is the deadline to submit BOI reports?

The deadline for reporting BOI reports varies based on the establishment date of your company:

If your company was formed or registered before January 1, 2024, you should submit BOI reports to FinCEN by January 1, 2025.

If your company was established or registered after January 1, 2024, you must file the report within 90 days from the date of effective registration.

For companies formed or registered after January 1, 2025, the deadline is within 30 days from the date of effective registration.

Make sure to submit the initial BOI report and any subsequent changes in business authority, ownership, or corrections promptly. An amendment should be filed within 30 days of such changes.

Are there any penalties if you fail to submit BOI reports?

Not submitting a BOI report to FinCEN could lead to penalties. These penalties cover a range of violations, such as:

• Intentionally failing to file a report
• Providing false information
• Unauthorized disclosure of information.

The penalties for non-compliance can vary. They may include civil fines of up to $500 per day, as well as potential criminal penalties, such as imprisonment for up to two years and/or a fine of up to $10,000. Additionally, senior officers of an entity failing to file a required BOI report may also be held accountable for the omission.

The Bottom line on BOI Reporting

In 2024, addressing requirements for your business is a must and may include filing a BOI Report with FinCEN. You have the option to file your BOIR either through the FinCEN website or using e-filing services like TaxBandits. We get it; dealing with BOIR filings can feel daunting. But armed with the right information and a reliable e-filing provider, you can stay compliant and sidestep any penalties.

We trust this blog has shed light on the common uncertainties surrounding BOIR reports. Having a firm grasp on the basics of BOI requirements is vital for maintaining transparency and integrity in your business operations.