The Financial Crimes Enforcement Network (FinCEN) is tightening regulations to improve transparency in business ownership, primarily through the implementation of Beneficial Ownership Information (BOI) reporting requirements. These requirements are aimed at helping combat illicit financial activities by ensuring that accurate and current ownership information is available to law enforcement and other authorities. If you own 25% or more of a company or have significant control over it, it’s essential to understand how the new BOI reporting requirements apply to you, particularly if your business was established before January 1, 2024, or is a new venture launched in 2024.
BOI Reporting Requirements for Businesses Established Before January 1, 2024
Businesses that were in existence before January 1, 2024, are required to file their BOI reports with FinCEN by January 1, 2025. These businesses will need to provide detailed information about their beneficial owners, defined as individuals who own 25% or more of the company or exercise substantial control over it. The information required includes:
- Full legal name
- Date of birth
- Current residential or business address
- A unique identifying number from an acceptable identification document (such as a passport or driver’s license)
This reporting is essential for companies that haven’t had to disclose this level of ownership detail in the past. Companies need to start gathering this information well in advance to meet the deadline.
BOI Reporting Requirements for Businesses Formed on or After January 1, 2024
For businesses formed on or after January 1, 2024, the BOI reporting requirements are stricter and more immediate. Companies created in 2024 or later must submit their BOI report to FinCEN within 90 days of formation. Like older businesses, these new entities must provide detailed information about their beneficial owners. Timeliness is crucial—failure to meet this 90-day deadline could result in significant penalties.
Exemptions
It’s important to note that not all businesses are required to file a BOI report. Large operating companies, certain regulated entities, and inactive entities may be exempt. However, the majority of small and medium-sized businesses will need to comply.
Preparing for Compliance
Whether your business was formed before or after January 1, 2024, it’s essential to prepare for BOI reporting now. Start by identifying your beneficial owners and gathering the required information. If you’re forming a new business, make sure you understand the 30-day reporting deadline and have a plan in place to meet it. Failure to comply with FinCEN’s BOI requirements could result in penalties, including fines.
FinCEN’s BOI reporting requirements are a significant step toward increasing transparency and preventing financial crime. By understanding and complying with these requirements, you can avoid penalties and ensure that your business remains in good standing. Whether your business is established or new, now is the time to get familiar with the rules and start preparing for compliance.
