As part of new regulations issued by the Financial Crimes Enforcement Network (FinCEN), many U.S.-registered businesses must now submit Beneficial Ownership Information (BOI) reports. This new requirement is designed to improve financial transparency and prevent financial crime by making it easier to identify individuals who own or control businesses in the U.S. With filing deadlines approaching, here’s a breakdown of what your business needs to know to stay compliant.
Who Must Report
Most corporations, limited liability companies, and similar entities formed or registered in the U.S. are required to file Beneficial Ownership Information reports. Entities required to file include:
- Corporations and LLCs: Nearly all corporations and LLCs in the U.S. must file, with limited exemptions.
- Partnerships and Limited Partnerships: General and limited partnerships typically need to comply with Beneficial Ownership Information (BOI) reportsBOI reporting.
- Business Trusts and Statutory Trusts: Trusts functioning as business entities fall under the reporting requirements.
- Foreign-Owned Entities: Entities with foreign ownership are also required to report their beneficial owners, including any significant foreign stakeholders.
Who Is Exempt from Filing
Certain entities are exempt from BOI reporting requirements, such as:
- Large Operating Companies: Companies with more than 20 full-time U.S. employees, over $5 million in gross receipts, and a physical operating presence in the U.S.
- Tax-Exempt Organizations: Nonprofits, charities, and other organizations that qualify for tax-exempt status.
- Regulated Entities: Businesses already regulated by federal or state government agencies (e.g., banks and credit unions) that report ownership details to those agencies.
- Inactive Entities: Entities inactive for more than five years, meeting specific criteria.
Beneficial Owners
A “beneficial owner” is any individual who directly or indirectly exercises substantial control over the reporting company or directly or indirectly owns or controls 25% or more of the company’s ownership interests. Beneficial owners can be individuals who:
- Hold significant decision-making power over the business’s operations
- Own a substantial percentage of the business’s equity
- Exercise influence or authority over the business, whether formally or informally
When to File
The deadline for submitting the initial BOI report depends on when your company was created or registered:
- Entities Created Before January 1, 2024: The initial BOI report is due by January 1, 2025.
- Entities Created Between January 1, 2024, and January 1, 2025: The initial BOI report is due within 90 calendar days from the date the company is registered or receives actual notice of registration.
- Entities Created On or After January 1, 2025: The initial BOI report must be filed within 30 calendar days from the date of registration or notice of registration.
Adhering to these deadlines is essential to avoid penalties for late filing.
Penalties for Non-Compliance
Failure to comply with BOI reporting requirements can lead to significant penalties:
- Civil Penalties: Businesses may face fines of up to $500 per day for late filing.
- Criminal Penalties: Intentional non-compliance, including providing false information, can lead to criminal fines and even imprisonment.
Filing Your Report
FinCEN provides an online portal for e-filing BOI reports, making the process straightforward and secure. You can access the portal here: FinCEN BOI E-Filing Portal.
Service Providers Available to Assist
If you prefer assistance in filing your BOI report, the following service companies offer BOI compliance and reporting support:
These providers can help streamline your filing process and ensure you meet all necessary requirements.
How Nexus Square Can Support You
If you have questions about BOI reporting or would like further guidance on whether your business must file, feel free to reach out to our team. We are here to help you navigate these new requirements and ensure that your business remains in compliance.
