Understanding the New Beneficial Ownership Information (BOI) Filing Requirement

In 2024, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) introduced a new reporting requirement under the Corporate Transparency Act (CTA). This law requires certain businesses to file beneficial ownership information (BOI) to help increase transparency and combat illicit financial activities. As a small business owner, it’s essential to understand how this filing may apply to you and what steps you need to take to stay compliant.

What is the BOI Filing Requirement?

The BOI filing is a separate report submitted directly to FinCEN. It provides information about individuals who own or control certain businesses in the U.S., referred to as “beneficial owners.” Unlike other tax filings, this report is not submitted to the IRS and does not affect your personal income tax return, such as your Form 1040. Instead, it’s a standalone filing specifically designed for transparency in business ownership.

Who Needs to File?

The BOI filing requirement applies to "reporting companies," which include:

• Domestic Reporting Companies: Corporations, limited liability companies (LLCs), and similar entities created in the U.S. by filing with a state agency, such as a Secretary of State.

• Foreign Reporting Companies: Businesses formed outside the U.S. but registered to do business within the U.S.

If your business falls into one of these categories, you likely need to submit a BOI report unless you qualify for an exemption.

Are There Any Exemptions?

The FinCen website outlines 23 exempt organizations:

• Securities reporting issuer

• Governmental authority

• Bank

• Credit union

• Depository institution holding company

• Money services business

• Broker or dealer in securities

• Securities exchange or clearing agency

• Other Exchange Act registered entity

• Investment company or investment adviser

• Venture capital fund adviser

• Insurance company

• State-licensed insurance producer

• Commodity Exchange Act registered entity

• PCAOB registered accounting firm

• Public utility

• Financial market utility

• Pooled investment vehicle

• Tax-exempt entity

• Entity assisting a tax-exempt entity

• Large operating company

• Subsidiary of certain exempt entities

• Inactive entity

What Information is Required?

For each beneficial owner, the BOI report must include:

• Full legal name.

• Date of birth.

• Residential or business address.

• Unique identification number (such as a passport or driver’s license number).

This information helps FinCEN identify the individuals with significant control or ownership interests in a business.

Filing Deadlines

The filing deadlines depend on when your entity was formed:

• Existing Entities (formed before January 1, 2024): Initial reports must be filed by January 1, 2025.

• New Entities (formed on or after January 1, 2024): Must file within 90 days of formation.

Staying aware of these deadlines is essential to avoid potential penalties.

Is There a Cost to File?

Filing the BOI report directly with FinCEN is free. Note that any unsolicited requests for payment directly from FinCEN are likely fraudulent.

How to File

The BOI report can be submitted online through FinCEN’s portal. Before filing, gather all necessary information about each beneficial owner and review FinCEN’s guidance to ensure compliance. Consulting with an accounting or legal professional can also help you navigate this process smoothly.

Why is This Important?

The BOI reporting requirement aims to promote business transparency and prevent the misuse of anonymous business structures for illegal activities. For small business owners, meeting this requirement helps ensure you remain compliant and avoid any future penalties.

How Can FHAS Help?

At First Hand Accounting Solutions (FHAS), we’re here to support your small business needs. We understand that new compliance requirements can be overwhelming, especially for small business owners juggling various responsibilities. Whether you need guidance on the BOI reporting process or ongoing accounting support, our team is here to help.

For more information about the BOI filing requirement or to discuss your specific needs, please reach out to FHAS. We’re committed to helping you understand and navigate new regulations to keep your business compliant and thriving.