A contributor from the Association for Consulting Expertise explains what the report is and why it’s important. If it applies to you, you’ll need to file one with the Financial Crimes Enforcement Network.
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Q: I understand that in 2024 businesses will need to file a new report about their owners with the federal government. What is the report, and where and when do I need to file it?
ACE advises: The report is called a Beneficial Ownership Information Report, and if it applies to you, you will need to file it with the Financial Crimes Enforcement Network. It must be filed before Jan. 1, 2025. You can file online.
BOI Reports provide the federal government with the identities of individuals owning and/or controlling a company, to make it more difficult to use shell companies to engage in illegal activities.
As failure to comply can result in both civil and criminal penalties, you should assume you must report if you are a corporation or limited liability company organized under state law or Indian tribe, or a foreign entity registered to do business in a state or Indian tribe.
Your business may fall within one of 23 exemptions; FinCEN has published a Small Entity Compliance Guide, to help make the determination.
Likewise, you should assume that anyone who can vote or otherwise influence your business’s activities may be a “beneficial owner.” This could include senior officers, anyone with authority to appoint or remove senior officers or a majority of the board, or anyone else with authority to influence the company’s business, finances, and/or structure.
Individuals with a 25% ownership in the business are also considered beneficial owners. The Small Business Compliance Guide can help identify your beneficial owners.
As Murray, Plumb & Murray attorney Christopher Branson observed in his “how to” column in November, “the BOI Report requirement is new and regulations are still under development, so details and rules are subject to change. With that in mind, find a trusted resource who will continue to review information as it becomes available and will be able to assist you and your company in making all required filings.”
Carrie Green Yardley, vice president of ACE, founded Yardley Esq. PLLC in 2015. The firm works with small businesses and owners on governance transactions, from startup to exit. She can be reached at carrie@yardleyesq.com.