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As of January 1, 2024 there’s a new form that most small business entities will have to file with the government here in the United States - the Beneficial Ownership Information Report. And yes, even single member LLCs, which typically have less responsibilities similar to this, have to file this one.
Back in 2021, the bipartisan Corporate Transparency Act was put in effect to curb illicit finances through small businesses. Illicit financial acts like tax evasion, money laundering, and hiding behind shell companies. This new act hopes to curb these by requiring businesses to report details about the ownership and owners of said business.
And yes, business owners arerequiredto file the Beneficial Ownership Information Report. The government is very serious about these reports, and have instilled penalties to match. Failure to file means facing a $500-per-day fine (up to $10,000) and up to two years in prison. So, let’s get you everything you need to know to file this for yourself.
The Beneficial Ownership Information Report (or BOI, for short) discloses information about the beneficial owners of the entities. A beneficial owner is considered someone who owners or controls at least 25% of a business’s ownership.
There are two different types of companies that must file out this form: Domestic Reporting Companies, and Foreign Reporting Companies.
A Domestic Reporting Company is any business entity that file documents with a government office, like a Secretary of State. And yes, even if you own a Single-member LLC - normally disregarded for tax purposes - you MUST fill out this form.
If you are operating as a sole proprietorship, you do not need to file this out. However,in this blog post, we explain why we really don’t recommend a sole proprietorship as your business type.
A Foreign Reporting Company is any foreign business entity (aka ones formed outside of the United States) that are registered to do business in the United States.
Filing your initial report should be moved to the top of your to do list because there are important deadlines to be aware of, and as mentioned previously, the penalties for missing this deadlines are harsh.
Existing Companies (Before January 1, 2024) have until January 1, 2025 to file.
NEW Companies (Created or Registered after January 1, 2024 but before January 1, 2025) only have 90 days to file.
NEW Companies (Created or Registered after January 1, 2025) only have 30 days to file.
The good news is that filing is free, and this is not an annual requirement. Unless you need to change or update your information, you only have to file this form once. Here’s what you’ll need to gather in order to fill out the form:
Business Information:
Beneficial Owner Information:
This Small Entity Compliance Guide has a comprehensive checklist. And once you have all of the information gathered, you’ll file through FinCEN, which is a bureau of the U.S. Department of Treasury whose purpose is to combat financial crimes.
If all of this has made you realize that it’s past time to get your legal foundations in order, we have an incredibly comprehensive checklist for you. Snag it free, and make sure your legal ducks are in a row so that you can file the Beneficial Ownership Information Report with ease!
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