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New Federal Requirement for Business Owners: Beneficial Ownership Information Reports

When owning a business, staying up to date on government mandates is crucial to avoiding fines and penalties. One of these requirements recently implemented is from the US Department of the Treasury's Financial Crimes Enforcement Network (FinCEN). It mandates that all US companies formed before 2024 must report their beneficial ownership information.  

In this informative guide, we'll break down everything you need to know about this new mandate and answer your pressing questions on this topic.

What is Business Ownership Information (BOI) reporting, and who needs to report?

BOI reporting is geared towards small domestic or foreign businesses that were created by filing documents with the secretary of state office or other qualifying state office. BOI is information about the individuals who directly or indirectly own/control a minimum of 25 percent of a business’ ownership interests. If you have registered your business as a company, you will become a reporting company in the eyes of FinCEN.

Entities obligated to adhere to Beneficial Ownership Information (BOI) reporting regulations, referred to as "reporting companies," are required to submit reports that outline the beneficial owners of the entity and, in certain cases, the individuals who have submitted applications to specified government authorities for the entity's formation or business registration.

Infographic entitled Reporting information For Each Beneficial Owner listing the information needed to be reported for each business owner.

When does reporting open?

The FinCEN (Financial Crimes Enforcement Network) has made it mandatory starting January 1, 2024 to report your beneficial ownership information. Companies have until January 1, 2025 to file their report.

How do you identify if you need to report BOI?  

You need to file the BOI if your company is a:

  • Domestic reporting company- It's a corporation, limited liability company (LLC) or any other entity created by filing a document with a secretary of state or any similar office in the United States.
  • Foreign reporting company: This includes entities (including corporations and limited liability companies) formed under the law of a foreign country that has registered to do business in the United States by filing a document with a secretary of state or any similar office.

What do you need to report?

The reporting company will need to report:

  • Basic information, including the legal name, trade names, office address and TIN
  • The beneficial owners: Legal name, DOB, residential address and identification document
  • The company applicants: Legal name, DOB, residential address and identification document (applicable only for businesses registered after January 1, 2024).

When do you have to report?

If your company was registered to do business before January 1, 2024, you will have until January 1, 2025, to file the initial BOI report.

If your company will be registered on or after January 1, 2024, and before January 1, 2025, you will have 90 calendar days after receiving the company’s registration notice to file its initial BOI report.

What will happen if you don’t report?

You may be subject to civil penalties of up to $500 for each day the violation continues. You may also face criminal penalties of up to two years imprisonment and a fine of up to $10,000.

Where do you need to report it?

You can do this electronically through a secure filing system available via FinCEN’s website.

Will this affect your 2023 tax return?

This rule is not issued by the IRS and won’t have any effect on your 2023 tax return.

What if I need to change or update the information that I reported?

If you need to make any changes to the report you filed, you need to file a completely new report with the updated information no later than 30 days from the change. Or, if you notice a mistake in your report, you have 30 days to correct the information.

Are any companies exempt from filing the BOI?

Certain entities are exempt from filing the BOI, including nonprofits, publicly traded companies and entities considered large operating companies. A company qualifies as a large operating company if they:

  • Have 20 or more full-time employees
  • Have a physical office location in the US
  • Filed an income tax return with more than $5,000,000 in sales

Keeping track of IRS mandates can be overwhelming. The good news is that FlyFin has you covered. Expert CPAs can answer any tax-related questions. A.I. will ensure you write off every possible deduction, saving you the most possible.

FlyFin CPA Team

FlyFin CPA Team

With a combined 150 years of experience, FlyFin's CPA tax team includes tax CPAs, IRS Enrolled Agents and other tax professionals, offering users the most comprehensive tax advice and preparation.

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