Beneficial Ownership Interest (BOI) Reporting

February 8, 2024

What is BOI reporting and how does it affect you?

New reporting requirements for most companies, including LLCs and corporations, came into effect on January 1, 2024, as part of the Corporate Transaction Act (CTA). Reports have to be made to the Financial Crimes Enforcement Network (FinCen).

What types of entities need to submit a BOI report?

The BOI reporting requirement is vast and applies to almost all small businesses! Certain groups are NOT required to file a BOI report, including 501(c)(3) nonprofit corporations and publicly traded corporations.

What information needs to be reported?

The CTA requires that companies must report their “beneficial ownership” information. This is information that identifies who has an ownership stake in the company. For example, the BOI report requires the company’s full legal name and trade names, addresses, and tax ID number, along with the individual legal names, dates of birth, street address, social security number, and driver’s license number or Indian tribe ID number of anyone considered a beneficial owner.

Who is a “beneficial owner” anyway?

Beneficial owners are individuals who, directly or indirectly:

  1. Exercise significant control over the reporting company or
  2. Own or control at least 25% of its ownership interests. Those holding “significant control” would include any managers in a manager-managed LLC and members in a member-managed LLC, as well as senior officers and people who have management powers to hire or fire senior officers, or anyone who has a strong influence on any major financial decisions of the company.

When do I need to report by?

New companies formed after January 1, 2024 must report within 90 days of receiving notice of their creation, or their registration being approved. For companies formed prior to January 1, 2024, they have until January 1, 2025 to file their initial BOI report.

What happens if me/my company fails to submit their BOI report?

The TCA provides for potential severe penalties for a willful failure to submit a report, or willfully filing a false report. These penalties could be civil, such as a $500 per day penalty, or criminal, such as two years imprisonment or a $10,000 fine. These penalties could apply to the entity, to the individual filing the BOI report, or the individual providing the filer with willful false information.

How can I go about filing a BOI report?

BOI reporting is rigorous and can be done through the FinCen website. If you or your small business would like help in filing your BOI reports, Hightower Reff Law’s experienced transactional attorneys can help.

This article should not be construed as legal advice. Situations are unique from one another and it is impossible to provide legal advice for every situation without knowing the individual facts.

If you would like to talk more about transactional law, contact Hightower Reff Law today.

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