There are new reporting requirements that impact most small business owners such as yourself. Small businesses that are registered to do business in any U.S. jurisdiction and those that do not qualify for an exemption are required to report Beneficial Ownership Information, (otherwise known as “BOI”), to the Financial Crimes Enforcement Network (FinCEN).
The penalties for willfully failing to file both initial and updated reports are steep; $500 per day that the report is late, up to $10,000 and imprisonment for up to two years.
The intent of the BOI reporting requirement is to help US law enforcement combat money laundering, the financing of terrorism, and other illicit activity.
When must companies file?
There are different filing timeframes depending on when an entity is registered/formed or if there is a change to the beneficial owner’s information.
- Existing entities (created/registered before 1/1/24) — must file by 1/1/25.
- New entities (created/registered in 2024) — must file within 90 days.
- New entities (created/registered after 12/31/2024) — must file within 30 days.
- Reporting companies that have changes to previously reported information or discover inaccuracies in previously filed reports — must file within 30 days.
What information is required to be reported?
The information companies must report includes full name of the reporting company, any doing business as (DBA) name, business address, state jurisdiction of formation, and an IRS taxpayer identification number (TIN).
Additionally, information about the beneficial owners of the company and for newly created entities, the company applicants of the entity is required. This information includes name, birthdate, address, and unique identifying number and issuing jurisdiction from an acceptable identification document (e.g., a driver’s license or passport) and an image of such document. There is no maximum for the number of people identified as beneficial owners.
Who is a beneficial owner?
Any individual who, directly or indirectly, either:
- Owns or controls at least 25 percent of the ownership interests of a reporting company, or
- Exercises “substantial control” over a reporting company (pretty much any owner, but possibly others too).
Almost all of our clients will be required to file this report. We will be sending out another communication in May further advising on how to comply with this requirement. Please contact our office at 847-382-3206 if you have questions or need assistance before then in complying with this new law.
If you have any questions, please do not hesitate to contact us.