Beneficial Ownership Information (BOI) Reporting Rule
The BOI reporting rule is a new regulation requiring certain businesses to report their beneficial owners to FinCEN starting January 1, 2024. This rule requires certain companies to report information about their beneficial owners to FinCEN. It’s important to determine if your business is a reporting company. If it is, you then must identify and document your beneficial owners. Existing businesses have until January 1, 2025, to file their initial report, while new businesses must report within 30 days of formation.
Key Points:
- Understand the BOI Reporting Rule
- Purpose: The BOI reporting rule is designed to increase transparency and combat financial crimes by requiring certain businesses to report information about their beneficial owners to FinCEN.
- Determine If Your Business Needs to Report
- Reporting Companies: Domestic reporting companies (corporations, LLCs, etc.) and foreign reporting companies (entities formed under foreign law doing business in the U.S.) need to report.
- Exemptions: Certain entities, such as credit unions, banks, and other regulated entities, are exempt from reporting.
- Identify Beneficial Owners
- Definition: A beneficial owner is any individual who directly or indirectly owns 25% or more of the equity interests or who exercises substantial control over the company.
- Information Required: Businesses must collect and report information such as name, date of birth, address, and identification numbers of beneficial owners.
- Know the Reporting Deadlines
- Existing Businesses: Businesses created or registered before January 1, 2024, must file their initial BOI report by January 1, 2025.
- New Businesses: Businesses created or registered on or after January 1, 2024, have 30 days to file their initial BOI report.
- Prepare for Reporting
- Documentation: Business owners need to gather necessary documentation for beneficial owners ahead of time.
- Forms and Tools: Once available, use the form and tools provided by FinCEN on their BOI webpage.
- Stay Informed
- Updates and Resources: Stay informed by regularly checking FinCEN’s BOI webpage for updates, FAQs, and resources.
- Compliance Guide: Refer to the BOI Small Entity Compliance Guide for detailed instructions and tools.
- Consult Professional Advice
- Legal and Financial Advisors: Business owners should consult with legal and financial advisors to ensure full compliance and to address any specific concerns or questions.
Specific Actions for Business Owners
- Evaluate Your Business Structure
- Determine if your business falls under the category of a reporting company.
- Collect Beneficial Ownership Information
- Identify all individuals who meet the criteria of beneficial owners and gather their required information.
- Monitor Deadlines
- Keep track of the deadlines for initial and ongoing BOI reporting to avoid penalties.
- Use Available Resources
- Utilize FinCEN’s compliance guide, interactive tools, and FAQs to navigate the reporting process.
- Stay Proactive
- Regularly update beneficial ownership information as changes occur within the business.
This is informational and does not constitute legal advice. For specific legal advice, consult your attorney.
