Managing your business’s compliance with new regulations is as crucial as handling its finances.

Managing your business’s compliance with new regulations is as crucial as handling its finances. The Beneficial Ownership Information Report (BOIR), under the Corporate Transparency Act (CTA), is one such regulation that demands your attention. Effective from January 1, 2024, this law was enacted by FinCEN (Financial Crimes Enforcement Network) to prevent misuse of legal entities in the U.S. Here's what you need to know:

The Rationale Behind BOIR

The CTA aims to deter bad actors from using shell companies to engage in illicit activities. By requiring businesses to disclose their beneficial owners, the law seeks to create transparency and accountability in corporate operations.

Who Needs to File?

The BOIR rule applies to domestic and foreign reporting companies, including LLCs and other entities formed by filing documents with a state or tribal office. If your business has a corporate tax ID and is registered with the state, you likely need to file. This includes sole proprietorships created through state filings.

Exemptions

Some entities are exempt, such as those already subject to FinCEN reporting requirements. These include banks, credit unions, investment companies, insurance firms, public utilities, and large operating companies with more than 20 U.S.-based employees, a physical office in the U.S., and over $5 million in annual sales.

Information to Report

Your BOIR must include:

• The company's legal name, DBA, address, state of formation, and IRS Tax ID.
• Beneficial owners' legal names, DOBs, addresses, and non-expired ID copies.
• For companies formed after January 1, 2024, the same details for company applicants.

Defining a Beneficial Owner and Company Applicant

A Beneficial Owner is anyone who exercises substantial control over the company or owns at least 25%. For companies formed after January 1, 2024, you must also report up to two company applicants: the person who files the creation document and the person responsible for the filing.

Reporting Deadlines

• Companies formed before January 1, 2024, must file by January 1, 2025.
• Those formed between January 1, 2024, and January 1, 2025, must file within 90 days.
• Companies formed after January 1, 2025, have 30 days to file.

Filing Fees and Annual Reporting

There is no fee to file the BOIR. While there's no annual reporting requirement, you must update or correct information as necessary.

Filing Process

You can access the filing form on FinCEN’s BOI E-Filing website. Any authorized person can file on behalf of the company, and they must provide their contact information.

Penalties for Non-Compliance

Failure to file can result in civil penalties of up to $500 per day and criminal penalties, including up to two years imprisonment and fines up to $10,000.

Seeking Assistance

While you don't need an attorney or CPA to file, consulting with professional service providers can be beneficial. They can help ensure you meet all reporting obligations efficiently and file your BOIR return on your behalf should you seek their support.

Conclusion

Like filing your annual income tax return, staying compliant with new regulations like the BOIR is crucial for the smooth operation and legal standing of your business. By understanding and fulfilling these requirements, you safeguard your business against potential penalties and contribute to a transparent corporate environment which helps to keep our world a safer place for all. Should you need or want assistance filing your BOIR return, please contact Experient Consultancy, Inc. at 574-315-0332 or aknudtson@experientconsultancy.com at your convenience. Alternatively, if you want to file your own return, please utilize the attached BOIR checklist to begin to compile the necessary information for filing. Good luck to you and feel free to reach out should you need some extra assistance.

Beneficial Ownership Information Report (BOIR) Checklist

The following information will be required to complete and file your BOIR report online with the US Treasury. Accurate business information only needs to be provided and filed once unless there is a change in ownership.

Business Information

• Full Legal Name of the Business:
• DBA of the Business (if applicable):
• Federal Tax ID # of the Business:
• State Business was Formed In:
• Current Physical Business Address:

Business Owners

A business owner is any individual with 25% or more ownership of the business. Please complete the following for each owner:

• Full Legal Name of the Owner:
• Date of Birth of the Owner:
• Residential Address of the Owner:
• Identification Document (A scanned copy of only one of the following must be provided):
  • State-issued driver’s license
  • US Passport