As the new year approaches, more small business entities will be responsible for reporting Beneficial Ownership Information (“BOI”) to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). There are substantial civil and criminal penalties for failing to comply with FinCEN regulations, so staying up to date on these requirements is vital.
Information that must be reported concerning the company includes the name of the company, any trade name, the company’s address, and the jurisdiction of formation. Reports must also include the full legal name, date of birth, address, and a unique identifying number and issuing jurisdiction from a U.S. passport, driver’s license, or other identification document. Special reporting requirements may apply depending on the type of company.
Timeliness is critical when filing BOI reports: Reporting companies that were created or registered on or after January 1, 2024, have 90 calendar days after receiving actual or public notice that the creation is effective to file their BOI reports. Reporting companies created or registered on or after January 1, 2025, have 30 calendar days from actual or public notice of the company’s creation or registration to file BOI reports. If any information changes, the company must file an updated BOI report within 30 days.
The most recent changes to the Beneficial Ownership Information Reporting Rule provided new requirements for small business entities. Reporting companies are divided into domestic and foreign reporting companies. The former includes corporations, LLCs, and other companies created by the filing of a document with a secretary of state. The latter includes companies organized under the laws of a foreign country that are registered to do business in a U.S. State or Tribal jurisdiction by a document with a secretary of state or similar office.
While many businesses are covered under the regulations, there are also 23 exemptions from the reporting requirements. These exemptions cover entities such as tax-exempt entities, banks, credit unions, accounting firms, public utilities, and various entities involved in securities.
Reports contain information about the business entity itself and concerning two categories of individuals: beneficial owners and company applicants. In general, beneficial owners are individuals who either (i) own or control 25 percent of a company, or (ii) have substantial control over the company. Company applicants are individuals who directly file or are primarily responsible for filing the document that registers or creates the company.
As always, should you have questions or need assistance with business matters, please contact Michael Airdo at mairdo@airdowerwas.com or Matthew Lehmann at mlehmann@airdowerwas.com.