Everything You Need to Know About the New Beneficial Ownership Information Report (BOIR)
The Beneficial Ownership Information Report (BOIR) is a significant update in U.S. compliance and transparency laws, particularly for small businesses and corporate entities. Introduced by the Financial Crimes Enforcement Network (FinCEN), this new requirement is a part of the Corporate Transparency Act (CTA), aiming to prevent illicit activities, including money laundering and terrorism financing, by increasing transparency around company ownership. Let’s dive into what BOIR is, who it impacts, and what companies need to do to stay compliant.
What Is the Beneficial Ownership Information Report?
The BOIR requires certain companies to report information about their beneficial owners to FinCEN. A beneficial owneris an individual who owns or controls at least 25% of a company's equity interests or exercises substantial control over the entity. This could be a business owner, a majority shareholder, or anyone else with significant authority over the company's operations.
Why Was the BOIR Introduced?
The BOIR is part of a larger move towards transparency in corporate ownership. Shell companies and other opaque structures have traditionally been used to hide illegal activities. With this regulation, the U.S. aims to align more closely with international standards, providing government authorities with the information they need to detect and investigate illegal activities related to business structures.
Who Must File a BOIR?
The BOIR filing requirement applies to many types of businesses, including corporations, limited liability companies (LLCs), and other entities created by filing with state or tribal authorities. However, there are several exemptions, including:
Large operating companies with over 20 full-time employees, over $5 million in revenue, and a physical presence in the U.S.
Certain regulated entities, like banks and insurance companies, which are already subject to similar regulations.
Inactive entities that haven’t engaged in any business activities for several years.
For small businesses, especially those without complex ownership structures, it’s essential to determine whether they need to comply.
What Information Needs to Be Reported?
Companies subject to BOIR requirements must provide the following details about each beneficial owner:
Full Legal Name
Date of Birth
Residential or Business Address
Unique Identification Number from an acceptable form of ID (such as a passport or driver’s license)
The entity filing the report must also disclose information about the individual submitting the report (usually an officer or manager).
How and When to File
BOIRs will be filed directly with FinCEN, which is building a secure system to handle this sensitive information. Initial reports for existing companies are due by January 1, 2025, while new entities will have to file within 30 days of formation. Companies will need to keep their BOIR up to date by filing within 30 days of any changes to beneficial ownership information.
Potential Penalties for Non-Compliance
Non-compliance with BOIR requirements can result in significant penalties. This includes civil fines and even criminal penalties for willfully providing false information or failing to report. Ensuring accurate, timely, and complete filings is essential to avoid these consequences.
Key Takeaways for Business Owners
Determine if You Need to File: Review the types of entities subject to BOIR and determine if your business qualifies.
Identify Your Beneficial Owners: Work through your company’s structure to identify beneficial owners accurately.
Gather Required Documentation: Ensure you have access to the necessary documents and information for each beneficial owner.
Stay Updated: Regulations can change, and FinCEN may refine BOIR requirements over time. Set reminders for compliance deadlines and changes in ownership.
The BOIR is part of a growing trend toward transparency and accountability in corporate governance. By understanding and meeting these requirements, business owners can avoid penalties and support efforts to create a more transparent and accountable business environment.
Visit this link to file your BOI today: https://boiefiling.fincen.gov
For a detailed video of the following you can visit here.
Simple Steps To Follow When Filling Out The BOI Form:
Filing Information: Click on Box 1a. Initial Report and then Click Next
Reporting Company: Skip box 3 and 4, In box 5 type your full LLC/Corporation Name. Leave box 6 blank. Select your EIN in box 7, Type in your EIN Number in box 8, Skip box 9, Choose USA for box 10a, and Choose the State your Corporation or LLC was formed in box 10b. Then use Lines 11 through 15 for your business address.
Company Applicant(s): Check box 16 and then you are done with this page. Go to bottom and click next.
Beneficial Owner: Skip box 35 through 37. Fill in boxes 38 through 50 for the Owners with 25% or more (If another Entity is an Owner then type in Full Entity Name on Line 38 and use the Main Owners Information for the rest of the lines). Use Box 51 to attach a copy of your Identifying Document (i.e. Driver’s License or Passport)
Submit: Fill in all information and click on ‘agree’ and then submit OIR
