Beneficial Ownership Information Reporting (BOI) is new to 2024. It is a regulatory requirement designed to increase transparency and compliance in company ownership. Relevant to business owners (LLC/Corp/SMLLC) because it involves disclosing individuals who have significant control or ownership in a company.
Here’s an overview:
Beneficial Ownership refers to the individuals who ultimately own or control a company. This can include anyone who:
- Directly or indirectly holds a significant percentage of the company’s shares or voting rights (often 25% or more).
- Has significant influence or control over the company, whether through ownership, voting rights, or other means.
Why is Beneficial Ownership Reporting Required?
- The primary goals of beneficial ownership reporting are Transparency and Compliance. By disclosing the BOI of and entity it will prevent the concealment of ownership, which can be used for illicit activities such as money laundering, tax evasion, and financing terrorism.
FinCEN’s Beneficial Ownership Reporting in the USA
In the United States, the Financial Crimes Enforcement Network (FinCEN) under the Corporate Transparency Act (CTA) mandates beneficial ownership reporting.
- Entities: Most corporations, limited liability companies (LLCs), and single-member liability companies (SMLCs), are required to report.
- Information: Full legal name, date of birth, current address, and unique identifying information (such as a driver’s license or passport card) for each beneficial owner.
- Deadlines: Initial reports are required within 90 days after the formation of the entity or after the beneficial ownership reporting rule becomes effective. Updates are required when there are changes in ownership or control. Entities established prior to January 1, 2024 are required to file by December 31, 2024. Beginning 2025 entities will have 30 days to file the BOI report after the formation of an entity.
Steps for Business Owners
- Identify Beneficial Owners: Determine who meets the criteria of a beneficial owner within your organization.
- Contact Us: Work with your trusted compliance experts at Lawhorn CPA Group to ensure adherence to all reporting requirements and to address any complexities. Any questions please reach out to us at infocpa@lawhorncpa.com