“Beneficial Ownership” Reporting Regulations Are Now in Effect

WHY should I care about Beneficial Ownership?

Certain corporate entities are now required to disclose a Beneficial Ownership Information Report (BOIR), including the identities of individuals holding substantial ownership stakes or controlling interests.

These new reporting regulations – courtesy of the U.S. Treasury department’s Financial Crimes Enforcement Network (FinCEN) – took effect in January 2024 in attempt to promote corporate transparency and reduce illicit financial activities.

Our visual above highlights some of the key details of Beneficial Ownership Information Reporting (BOIR).

WHAT is Beneficial Ownership?

In the realm of corporate entities, beneficial ownership refers to individuals who ultimately own or control a company, even if their names might not be directly associated with the entity. These individuals wield substantial influence or reap the benefits of the entity’s activities, making them crucial figures in understanding the entity’s operations and potential risks.

Beneficial Owners typically fall into the following categories:

• ≥25% Ownership Interest
• Substantial Control (i.e. company CFO)
• Company Applicants (for new entities formed on or after 1/1/2024)

WHO needs to report Beneficial Ownership Information (BOI)?

Entities file the report on behalf of their Beneficial Owners. The reporting requirements apply to new and existing entities:

• Corporations (C and S)
• Limited Liability Companies (LLC)
• Entities Formed with the Secretary of State

Note that several exemptions (23, to be exact) exist including publicly traded companies, many nonprofits, and certain large operating companies with over 20 employees. See all exemptions here.

(If you really want to dig into the weeds, FinCEN has published this Small Entity Compliance Guide.)

HOW do I report Beneficial Ownership Information (BOI)?

Beneficial owners must submit their form to FinCEN’s new BOI e-file system found here.

You will need to upload a digital copy of your drivers license or passport.

Fortunately, there are no filing fees and your information is not disclosed to the public.

WHEN is the deadline to report Beneficial Ownership Information (BOI)?

Your entity’s deadline to file its BOI report depends on when the entity was formed.

• Businesses Formed Before 01/01/2024: File BOI by 01/01/2025
• Businesses Formed In 2024: File BOI within 90 Days of Formation
• Businesses Formed After 12/31/2024: File BOI within 30 Days of Formation

The good news is reporting BOI is a one-time requirement unless the beneficial ownership changes – in which case you’d have 30 days to file the update.

What happens if I decide NOT to report Beneficial Ownership Information (BOI)?

Thinking about skipping this process? We don’t recommend it.

The penalty for failing to comply with these new regulations including civil penalties of up to $500 for each day that the violation continues, or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000.

We’re here to help.

We get it. As a business owner, complying with the seemingly never-ending (and ever-evolving) list of regulations is never fun.

Fortunately, FinCEN has made the BOI reporting form very easy to complete online.

While we unfortunately can’t complete the form for you, your BlueSky team is always here to answer your questions and help simplify the process.