BOI Reporting in 2024: The Crucial Steps Your Business Needs to Take

ARTICLE | July 02, 2024

As of January 1, 2024, the Beneficial Ownership Information (BOI) reporting requirements have been set in motion with the objective of greater transparency in the business environment. Mandated by the 2021 Corporate Transparency Act, these new rules demand covered entities to report specific information about their beneficial owners and officers to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). Failing to adhere to these requirements can lead to substantial penalties, making it crucial for businesses to understand the scope and nature of these requirements. 

The BOI reporting requirements are designed to combat financial crimes such as money laundering, tax evasion, and human trafficking through the use of shell companies. The information required for filing will be utilized by various governmental organizations to address these issues.

Deadlines for BOI Reports

Entities existing before January 1, 2024, are required to file their initial report by January 1, 2025. However, it is recommended to start preparing for the reporting requirements well in advance. For companies newly formed from January 1, 2024, the initial BOI reports should be filed within 90 days of their Secretary of State filing. 

Subsequent reports must be submitted within 30 days of any changes in beneficial ownership information or loss of an exemption. If an error is identified in a report, a corrected report must be filed within the same timeframe. 

Who Must File BOI Reports?

More than 32 million existing entities are expected to comply with these new requirements. This mandate generally applies to midsize and small businesses, as these entities have historically been used by money launderers. Included are all domestic corporations, LLCs, S-Corps, or entities created by filing documents with a Secretary of State’s office. Foreign corporations, LLCs, or entities formed under the law of another country, but registered to do business in any state, are also required to file a report. 

Each entity must file its own report; a parent company cannot file a single report for its subsidiaries. There are exemptions, primarily for large operating companies with certain conditions such as having 20 or more full-time employees and more than $5 million in gross receipts from sales inside the United States. 

What Must Be Reported?

Companies required to file BOI reports must provide basic company information and information about company applicants and beneficial owner(s). This includes name, date of birth, residential address, ID from a specific document, and an image from the same document. 

Entities will need to determine who their company applicants and beneficial owners are. Company applicants can be up to two individuals involved in the filing of incorporating documents. Beneficial owners are individuals who either exercise substantial control over the company or own or control at least 25% of the company's ownership interests. 

Penalties for Non-compliance

Penalties for non-compliance start at $500 per day with no cap on this daily penalty. Furthermore, criminal penalties can reach up to $10,000 and/or imprisonment of up to two years for willfully and intentionally reporting incomplete or false information. 

The determination of beneficial owners and maintaining compliance with BOI requirements is a crucial task for businesses. As a first step, confirm if your business is required to file a BOI report. Discuss this with your attorney or a proficient accounting firm to get a clear understanding of these regulations. While the road ahead may seem daunting, with careful preparation and the right resources, your business can successfully navigate the new BOI reporting requirements.