BOI- Where/What/Why/How??

You might have heard about the Beneficial Ownership Information Reporting better known as BOI or BOIR which is a result of the Corporate Transparency Act.

Here are some key points that you need to know so you can rest easy:

• Only entities formed in 2024 will need to report to FinCEN now

• If your business was formed prior to 2024, you have no requirement to report anything to FinCEN until January 1, 2025

What is BOI?

While we currently file returns annually that include who the owners of each entity are, we are reporting that information to the Internal Revenue Service and your State’s tax department. FinCEN is a division of the Department of Treasury and doesn’t easily have access to this information. What they are doing is building a database of all entities that are formed in the United States with not only the names and identifying information of the shareholders, but also the individuals that ultimately benefit from the business. There has been abuse in the US where companies are formed as shell companies or front companies that take money in for illicit purposes. Unfortunately, we as small business owners are now burdened with yet another reporting requirement because of this.

Who does BOI affect?

All corporations (both S and C), LLCs, LLPs, LPs or any other type of entity that was created by the filing of a document with the secretary of state for any state is required to file.

There are currently 23 exemptions to reporting, the only one that would apply to small businesses would be a business which has more than 20 Full Time Employees in the United States with no less than $5,000,000 in gross receipts(Sales)

Inactive entities (those not engaged in active business, no assets, with no ownership changes in last 12 months) are the only other exemption that we have identified may be applicable.

What information are they requesting?

Among information about the actual business entity, we will be required to report information about any person who is an owner or who has substantial control over the company or who is an “important decision maker” including but not limited to:

• Name

• Date of Birth

• Principal Residence Address

• Drivers license or Passport Number along with clear picture of document

 After this initial filing is completed, the business will be required to file a new report within 90 days of any time any of the following occur:

• Change in any business information (address, name etc)

• Change in business owners or beneficial owners or decision maker or substantial control member

• Change of address or driver license of beneficial owner or decision maker or substantial control member