I wasn’t going to write a post about this because I mistakenly thought the information was widely available, known, and accepted by business owners. However, just over the past week, I have seen countless posts and messages in various business groups from business owners asking about the details and even questioning the validity of the new Beneficial Ownership Information (BOI) requirement from the U.S. Treasury Financial Crimes Enforcement Network (FinCEN).
We first became aware of this new reporting requirement in January when the department announced it. After reading through the detailed information on their website, I took a few minutes to fill out and submit the online form. Now that it is November, I am surprised that many businesses are still unaware of this new requirement.
If you have a business, read through the site. If you meet the requirements, submit your form before the end of the year to avoid penalties. As they say, “ignorance of the law is no excuse.”
FAQs From FinCEN
Here are a few key details straight from the FinCEN FAQ page:
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What is beneficial ownership information?
- Beneficial ownership information refers to identifying information about the individuals who directly or indirectly own or control a company.
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Why do companies have to report beneficial ownership information to the U.S. Department of the Treasury?
- In 2021, Congress passed the Corporate Transparency Act on a bipartisan basis. This law creates a new beneficial ownership information reporting requirement as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.
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When do I need to report my company’s beneficial ownership information to FinCEN?
- A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025 to file its initial beneficial ownership information report.
A reporting company created or registered on or after January 1, 2024, and before January 1, 2025, will have 90 calendar days after receiving notice of the company’s creation or registration to file its initial BOI report. This 90-calendar day deadline runs from the time the company receives actual notice that its creation or registration is effective, or after a secretary of state or similar office first provides public notice of its creation or registration, whichever is earlier.
Reporting companies created or registered on or after January 1, 2025, will have 30 calendar days from actual or public notice that the company’s creation or registration is effective to file their initial BOI reports with FinCEN.
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Will there be a fee for submitting a beneficial ownership information report to FinCEN?
- No. There is no fee for submitting your beneficial ownership information report to FinCEN.
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Is a sole proprietorship a reporting company?
- No, unless a sole proprietorship was created (or, if a foreign sole proprietorship, registered to do business) in the United States by filing a document with a secretary of state or similar office. An entity is a reporting company only if it was created (or, if a foreign company, registered to do business) in the United States by filing such a document. Filing a document with a government agency to obtain (1) an IRS employer identification number, (2) a fictitious business name, or (3) a professional or occupational license does not create a new entity, and therefore does not make a sole proprietorship filing such a document a reporting company.
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What penalties do individuals face for violating BOI reporting requirements?
- As specified in the Corporate Transparency Act, a person who willfully violates the BOI reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues. However, this civil penalty amount is adjusted annually for inflation. As of the time of publication of this FAQ, this amount is $591.
A person who willfully violates the BOI reporting requirements may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000. Potential violations include willfully failing to file a beneficial ownership information report, willfully filing false beneficial ownership information, or willfully failing to correct or update previously reported beneficial ownership information.
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Still unsure? Just google “FinCEN BOI” and find the official US Government website yourself.