When starting or managing a business, compliance with legal regulations is a critical responsibility. One such requirement gaining prominence is the FinCEN Beneficial Ownership Information (BOI) filing, a mandate that aims to increase transparency in corporate ownership. In this post, we’ll break down what the BOI is, who needs to file it, and when it must be submitted.
What Is the FinCEN BOI?
The FinCEN Beneficial Ownership Information filing is a requirement under the Corporate Transparency Act (CTA), administered by the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. The purpose of the BOI filing is to combat financial crimes such as money laundering, terrorism financing, and tax evasion by requiring certain companies to report information about their beneficial owners.
A beneficial owner is generally anyone who owns or controls at least 25% of a company or exercises significant control over its operations.
The BOI filing includes information such as:
- Personal details of the beneficial owners (e.g., full name, date of birth, current address, and a unique identifier like a passport or driver’s license number).
- Information about the reporting company, including its legal name, address, and the state in which it was formed or registered.
Who Needs to File a BOI?
The filing requirement applies to many small and medium-sized businesses, particularly corporations, limited liability companies (LLCs), and other entities created by filing a document with a secretary of state or a similar office.
However, certain entities are exempt from filing, such as:
- Large operating companies with more than 20 full-time employees and over $5 million in annual revenue.
- Nonprofits and certain regulated entities, such as banks and credit unions.
- Publicly traded companies.
If you’re unsure whether your business qualifies, it’s essential to consult with an attorney to ensure compliance.
When Do You Have to File the BOI?
For Existing Entities Formed Before January 1, 2024:
Businesses formed before January 1, 2024, must submit their BOI reports by January 1, 2025.
For New Entities Formed in 2024:
Any entity created or registered between January 1, 2024, and December 31, 2024, must file its BOI report within 90 days of its formation or registration.
For New Entities Formed on or After January 1, 2025:
Entities formed on or after January 1, 2025, must file their BOI reports within 30 days of formation or registration.
Summary of Filing Deadlines
On or After January 1, 2025: BOI due within 30 days of formation.
Before January 1, 2024: BOI due by January 1, 2025.
During 2024: BOI due within 90 days of formation.
Why Is the BOI Filing Important?
Failure to file a BOI report or providing false information can lead to significant penalties, including:
- Fines of up to $500 per day of non-compliance.
- Criminal penalties, such as fines of up to $10,000 or imprisonment for up to two years in severe cases.
This filing helps ensure your business complies with federal laws and avoids penalties that could impact its operations.
How to File the BOI
The BOI filing can be completed through FinCEN’s online portal or by working with a legal professional to ensure accuracy and compliance. Given the detailed nature of the report and the potential consequences of errors, seeking assistance from an attorney is highly recommended.
Conclusion
The FinCEN BOI is a key part of federal efforts to promote transparency and combat financial crimes. If you’re a small business owner or an entrepreneur, understanding whether your business needs to file and meeting the deadlines is essential to staying compliant.
If you have questions about the BOI filing process or want to ensure your business complies with federal regulations, Landry Legal, PLLC can help. Contact us today for expert guidance tailored to your needs.
