Understanding the New BOI Requirement

With the new Beneficial Ownership Information Requirement, the U.S. government is asking businesses to share some basic info about who owns them. Let’s break it down so you have all the details, and it’s easy to understand!

TL;DR:

• New BOI (Beneficial Ownership Information) rules mean small businesses must report their key owners to the government.
• Most businesses, including LLCs and corporations, will need to file.
• The process is online and takes about 10-20 minutes. The deadlines depend on when your business was formed.

Why Do You Have to Report?

The BOI rule is part of the Corporate Transparency Act. It’s designed to stop bad actors from hiding behind businesses to do illegal things like money laundering. Think of it as a way to protect everyone by keeping things transparent.

This new reporting requirement kicks in when a company is first created or if there are big changes in who owns it. The details are sent to a central database that authorities and banks can use to keep everything fair and accountable.

Compliance with BOI reporting is absolutely crucial. The Corporate Transparency Act can impose both civil and criminal penalties for violations of the reporting requirements.

For each day a BOI report is late, you may face a fine of up to $591. This penalty can accumulate quickly!

Who Needs to Report?

Most businesses, like LLCs, corporations, and limited partnerships, need to file. However, if your business is very large (more than 20 employees and $5 million in annual revenue) or already heavily regulated (like banks), you might not need to report.

What Is Reported?

• Business Info: Name, address, and EIN (Employer Identification Number).
• Owner Info: Name, address, date of birth, and an ID number (like a driver’s license or passport) for anyone who owns at least 25% of the business or has significant control.
• If you would like to designate your spouse as the beneficiary of your business, you will need to report their personal information (driver’s license or passport) as the beneficial owner.

When to Report?

• If your business was formed before January 1, 2024: You must report by January 1, 2025.
• New companies created or registered in 2024: Must file within 90 calendar days after receiving notice of the company’s creation or registration.
• If formed on or after January 1, 2025: You have 30 days to file.

How to Report?

Reporting happens online through FinCEN’s website (www.fincen.gov/boi). The process is designed to be simple, secure, and free of charge. It’s user-friendly, and you can do it yourself. No need for fancy software or lawyers!

How Long Will It Take?

Filing takes about 10-20 minutes if you have all your documents ready.

It’s important to note, Beneficial ownership information reporting is not an annual requirement. A report only needs to be submitted once, unless you need to update or correct information.

By following these rules, you’re helping create a more secure and transparent business environment. Plus, it’s quick and easy—just another step in running a great business! For more detailed information or specific questions about your reporting obligations, consider consulting with a legal professional or visiting FinCEN’s official website.

– Nate Granito, FMVA® & Adrienne Davis, CPA, CFP® 

Sources:

• Financial Crimes Enforcement Network. (2023). Beneficial Ownership Information Reporting. U.S. Department of the Treasury. https://www.fincen.gov/boi
• Financial Crimes Enforcement Network. (2023). Small Entity Compliance Guide. U.S. Department of the Treasury. https://www.fincen.gov/boi-small-entity-compliance-guide
• Internal Revenue Service. (2023). Beneficial Ownership Information Reporting. https://www.irs.gov/businesses/small-businesses-self-employed/beneficial-ownership-information-reporting
• U.S. Department of the Treasury. (2023). Fact Sheet: Beneficial Ownership Information Reporting Rule. https://home.treasury.gov/system/files/136/BOI-Fact-Sheet.pdf
• U.S. Small Business Administration. (2023). New Beneficial Ownership Reporting Requirements for Small Businesses. https://www.sba.gov/blog/new-beneficial-ownership-reporting-requirements-small-businesses

All written content is for information purposes only. Opinions expressed herein are solely those of Zenith, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.