On January 1, 2024 a new reporting requirement went into effect that requires millions of small businesses to file a Beneficial Ownership Information (BOI) Report with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).

Who has to file a BOI report?

Every corporation, LLC, or other entity created by the filing of a document with a Secretary of State or similar office under the law of a state or Indian tribe is required to file a BOI report unless it qualifies for an exemption. Those entities created in the United States and not exempt, and therefore required to file a BOI report, are called “domestic reporting companies”.  (Certain entities created in foreign countries and registered to do business in the United States are also required to file a BOI report and are called “foreign reporting companies.”)

What kind of information has to be reported by domestic reporting companies?

A domestic reporting company created before January 1, 2024 has to provide information about the company and about its beneficial owners. A domestic reporting company created on or after January 1, 2024 has to provide information about the company, its beneficial owners, and its company applicants.

What information about the company has to be reported?

The report must set forth the reporting company’s (1) full legal name, (2) any trade or “doing business as” names, (3) complete current street address of the principal place of business, (4) jurisdiction of formation, and (5) taxpayer identification number.

What information has to be reported for each of the beneficial owners and applicants?

The report must set forth their (1) full legal name, (2) date of birth, (3) complete current residential street address (except in the case of a company applicant who forms or registers an entity in the course of the company applicant’s business, who has to provide the street address of the business), (4) unique identifying number and the issuing jurisdiction from either a current (i) U.S. passport, (ii) state or local ID document, (iii) driver’s license, or (iv) if the individual has none of those, a foreign passport, and (5) an image of the document from which the unique identifying number was obtained.

Who is a “beneficial owner”?

A beneficial owner is an individual who, directly or indirectly, either exercises substantial control over the reporting company or owns or controls at least 25 percent of its ownership interests.

Who is a “company applicant”?

A company applicant is the individual who directly files the document that creates the domestic reporting company and the individual who is primarily responsible for directing or controlling the filing if more than one individual is involved in the filing of the document.

What is the deadline for submission of beneficial ownership?

Reporting companies created before Jan. 1, 2024, will have until Jan. 1, 2025, to submit beneficial ownership information (BOI) to FinCEN, and Reporting Companies created after Jan. 1, 2025, will have 30 days from creation or registration.

What is the penalty for beneficial ownership reporting?

Any company that fails to file a required beneficial ownership report or amendment by its filing deadline is subject to a fine of $500 per day, up to a maximum of $10,000. Willful failures or intentionally filing inaccurate information is a felony, punishable by up to two years in prison.

The MG Services team is ready to help you with this obligation.