Filing Your BOI Report

Did you know the Financial Crimes Enforcement Network has provided a new requirement? As of January 1st, 2024, small businesses may have to file what’s called a BOI (beneficial ownership information) with the government. This will help law enforcement agencies track down individuals who may be using shell companies and other tactics to hide their illegal activities. We will break it down further so you can understand all the important information and how it impacts your company.

Understanding Beneficial Ownership

You could be considered a beneficial owner in several ways, as explained in more detail below.

Ownership and Control: A person may be considered a beneficial owner if they directly or indirectly own or control 25% or more of a company’s equity interests. This includes individuals who have a significant ability to influence or manage the entity’s operations and policies.
Direct or Indirect Beneficial Ownership: Direct beneficial ownership refers to owning an interest in a company directly. In contrast, indirect beneficial ownership refers to owning an interest in a company through another entity.
Final Rule Definition: The final rule defines beneficial owners as individuals who meet one or more of the above criteria and are not excluded from reporting based on certain exemptions (e.g. publicly traded companies).

How Are Business Owners Different From Beneficial Owners?

The key difference between a business owner and a beneficial owner is pretty simple. A business owner is the legal owner who can sell or transfer the business, while a beneficial owner can actually influence the decisions made in the business.

Legal Owners

This person or group appears on all legal documents as owning the business. They control the company’s assets and can decide its operations and policies.

Beneficial Owners

Beneficial owners are individuals who have a significant stake in the company but may not be listed on any legal documents, making it harder to trace their ownership. This could include individuals who use complex corporate structures or shell companies to conceal their identity.

Who Needs To File A BOI Report?

Most small businesses must file a BOI report if they have one or more beneficial owners, as defined by the guidelines. Essentially, if a company has individuals with significant control or ownership, 25% or more, of the business, they must submit this information. The goal is to ensure that the identities of these beneficial owners are transparent, helping to prevent illegal activities like money laundering or tax evasion. Publicly traded companies and certain other entities might be exempt from filing.

What Are The Requirements For BOI Reporting?

If you’re a small business owner, you might be wondering about the requirements or steps for filing a BOI report. Here are some essential things you should know.

1. Reporting Information About Your Company

The following details should be included:

Company Name: The official name under which your business is registered.
Address: The main office or business location.
State of Formation: The state where your business is legally formed or incorporated.

Tax Identification Number: A unique identifier used for tax purposes, such as an Employer Identification Number (EIN).

2. Beneficial Owners

When reporting information about beneficial owners, you must provide specific details to ensure transparency and compliance with BOI guidelines. The information required includes:

Full Legal Name: The complete name of the beneficial owner as it appears on legal documents.
Date of Birth: The exact birth date of the individual beneficial owner.
Residential Address: The beneficial owner’s primary residence or home address, distinct from a business address.
Identification Documentation: Official documentation number such as a passport or driver’s license, along with the issuing jurisdiction.

These elements are important for accurately identifying beneficial owners and ensuring the information we report is complete and current. It is key to remember that we submit this information to keep things accountable and prevent people from misusing corporate structures for shady purposes.

How To File a BOI Report

When preparing to file a BOI report, there are specific steps and best practices to follow to ensure compliance with the FinCEN guidelines. Here is a concise guide to help you through the process:

Gather Necessary Information: As outlined in the reporting requirements section, gather all required details about your company and any beneficial owners prior to filing. This will help streamline the process and ensure accuracy.
Choose the Right Method: Depending on your preference and the options available, you may choose to submit your BOI report online through a designated government portal or opt for a manual submission via mail. Online submissions are often quicker and provide immediate confirmation.
Review for Accuracy: Double-check all submitted information for accuracy. Any errors or omissions could lead to potential compliance issues or penalties. It’s crucial that details such as names, addresses, and identification numbers are entered correctly.
Stay Updated on Deadlines: To avoid fines or sanctions, ensure your BOI report is filed by the specified deadline. Familiarize yourself with the filing schedule and mark important dates on your calendar. Companies created before January 1st, 2024, have until January 1st, 2025, to file. Companies formed after this date have ninety days to file their report.
Retain Documentation: Keep copies of all submitted reports and related correspondence for your records. This documentation might be needed for future reference or audits.

Adhere to these steps to ensure a smooth and compliant filing process for small businesses. Remember, these reports aim to promote transparency and accountability in business practices.

Recap: Filing A BOI Report

What is a BOI report?

A BOI report, or Beneficial Ownership Information report, is a form that collects information about a business’s beneficial owners. FinCEN requires it to prevent illegal activities such as money laundering and tax evasion.

Who needs to file a BOI report?

Most small businesses must file a BOI report if they have one or more beneficial owners who own 25% or more of the company. Publicly traded companies and certain other entities may be exempt.

How do I know if I have beneficial owners in my company?

Beneficial owners are individuals with significant control or ownership in a company but may not be listed on legal documents. This could include individuals using complex corporate structures or shell companies to conceal their identity.

What information do I need to include in a BOI report?

When filing a BOI report, you must provide information about your company, such as the official name, address, and tax identification number. You will also need details about any beneficial owners, including their full legal name, date of birth, residential address, and identification documentation.

What is the penalty for noncompliance?

Failure to comply with BOI reporting requirements can result in penalties, fines, and other sanctions. These consequences may include monetary fines, criminal charges, or even the revocation of business licenses.

Need Help Filing A BOI Report? Contact Flexkeeper For More Guidance

If you have questions or need further assistance filing your BOI report, don’t hesitate to contact Flexkeeper. Our knowledgeable team is ready to provide the guidance you need to ensure compliance and avoid potential penalties. We have a group of professionals ready to assist you in preparing and submitting your BOI report accurately and promptly.