Don’t forget to file your Beneficial Ownership Information (BOI)

One critical deadline for U.S.-registered entities is the Beneficial Ownership Information (BOI) reporting requirement under the Corporate Transparency Act (CTA). If you’re a business owner, especially of a small or newly formed entity, understanding what BOI reporting entails and how to meet the upcoming deadline is key to avoiding potential fines and maintaining compliance.

The BOI reporting requirement mandates that many corporations, limited liability companies (LLCs), and other similar entities report specific details about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). Beneficial owners are defined as individuals who, directly or indirectly, exercise substantial control or own 25% or more of an entity. This reporting obligation was created to increase transparency within the U.S. business landscape, making it harder for entities to hide true ownership structures. By improving transparency, the CTA aims to curtail illicit activities, such as money laundering, fraud, and tax evasion, which are often facilitated through the use of anonymous shell companies.

Who Needs to File BOI?

Most U.S.-registered entities must comply with BOI reporting, but there are some exceptions. Certain categories of entities are exempt, including large operating companies with over 20 full-time employees and more than $5 million in revenue, entities already heavily regulated like banks, and tax-exempt organizations. For non-exempt entities, however, BOI reporting is mandatory.

The BOI filing requirement applies not only to entities registered in the U.S. but also to foreign entities registered to do business within the U.S. This means that even international companies conducting business in the U.S. must ensure they meet the requirement if they don’t fall into one of the exemption categories.

When is the Deadline?

BOI filing deadlines depend on the formation or registration date of the entity:

• For entities formed or registered before January 1, 2024: The deadline for BOI submission is December 31, 2024.

  
  

• For entities formed or registered on or after January 1, 2024: BOI information must be filed within 30 days of formation or registration.

  
  

Given that this is a new requirement, entities should not overlook this year’s December 31 deadline as FinCEN will strictly enforce compliance.

Consequences of Failing to File BOI

Failing to meet the BOI reporting requirements could result in significant financial and legal repercussions. The consequences for non-compliance include:

• Daily Monetary Fines: Entities that do not file BOI information by the deadline may incur fines of up to $500 per day until they meet compliance requirements.

  
  

• Criminal Charges: In cases of willful non-compliance or providing false information, individuals could face criminal charges. Penalties for such actions can include severe fines or, in some cases, imprisonment.

  
  

The year-end BOI filing deadline is an important compliance requirement for U.S.-registered entities, with serious penalties for those who overlook it. Preparing now will help you avoid potential fines and keep your business in good standing. For assistance or more information on BOI filing requirements, feel free to reach out to us at info@mkhstaxgroup.com.