Today, we’re diving into a critical filing requirement that is new for businesses in the U.S. And if you don’t do it correctly, it can result in steep penalties and even jail time.

To start things off, let me explain to you what the Beneficial Ownership Information, also know as BOI filing with FinCEN (Financial Crimes Enforcement Network, part of U.S. Treasury Bureau), is.

BOI filing is required by FinCEN under the Corporate Transparency Act or CTA to help combat illegal activities like money laundering.

So, whats’s the Corporate Transparency Act or CTA? Well, CTA was enacted as part of the Anti-Money Laundering Act of 2020, also known as AMLA.

AMLA came into effect more recently to strengthen financial transparency in the U.S. Basically, they want people to come forward and state that they own a company or control one.

6 Things You Must Know About BOI

#1 – Consequences of Not Filing or Filing incorrectly

Not filing the BOI accurately can lead to serious consequences. The penalties include fines of up to $500 per day for each day you’re late or incorrect.

In addition there is a jail time risk. According to the IRS, “If non-compliance is found to be willful, it could even result in criminal charges, including jail time.

Intentional falsification or omission is considered a serious offense.”

#2 – What You Need for BOI Filing with FinCEN

Key willing information includes:

  • Legal Name: Make sure to use the legal name of your entity or individual names for beneficial owners.
  • Date of Birth: Provide the date of birth for each beneficial owner.
  • Address: Include the residential or business address of beneficial owners.
  • Identification Information: You’ll need an identification document, such as a driver’s license or passport number, for each beneficial owner. You will need to upload this online.
  • Beneficial Owners and Control Persons: Identify anyone who holds at least a 25% ownership stake or who exercises significant control over the entity. Control can mean decision-making power, voting rights, or significant influence in the company.

#3 – Understanding Beneficial Ownership for BOI

Beneficial owners are individuals who own, control, or have a significant interest in a business.

For example, if you started a corporation and you own 25% or more, or if you are running a corporation and you have significant control making final management decisions.

This includes all official owners and any control persons. Even if someone doesn’t directly own a large percentage of the company, they may still be considered a beneficial owner if they influence company decisions.

What does it mean to influence company decisions? An influencer is a person that runs the company. They influence business decisions like how the company invests, the hiring or removing of high executives, operational decisions, what goes on with the company on a day to day basis, etc…

So why does this matter to the IRS? BOI increases transparency and is designed to prevent financial crime. By providing accurate information, you’re helping to keep the business world accountable and honest.

#4 – Filing Process & Tips for Accuracy

Filing method: BOI filings can be done electronically through FinCEN’s website, but always double-check if additional documentation is required.

Tips for Accuracy:

  • Review each detail carefully – even small mistakes can be costly.
  • Organize documents: Keep records of IDs and ownership structures to avoid errors.
  • Seek professional advice if needed: Filing BOI can be complicated, especially if your ownership structure is complex. A CPA or attorney can help ensure everything is correct.

#5 – Deadlines & Who Needs to File

  • Reporting Companies: The BOI filing requirement applies to most U.S. companies, including corporations, LLCs, and similar entities created or registered to do business in the U.S.
  • Exemptions: Some entities, such as publicly traded companies, large operating companies with over 20 full-time U.S.-based employees and $5 million in revenue, and certain regulated entities (like banks), are exempt from BOI filing.

Filing Deadlines

Filing deadlines depend on whether the entity is newly formed or an existing company.

  • New Entities (After January 1, 2024): For entities formed or registered on or after January 1, 2024, BOI filings are due within 30 days of formation or registration.
  • Existing Entities (Formed Before January 1, 2024): For entities created or registered before January 1, 2024, the initial BOI filing is due by January 1, 2025.
    So if you have an existing corporation established before 2024, you would need to file your BOI information by January 1, 2025.

#6 – Handling Changes and Updates to BOI Information

  • If there is any change in beneficial ownership (e.g., adding a new owner, removing an existing owner, or changes in name or address), you must file an updated BOI report within 30 days of the change.
  • This requirement applies to any significant changes in the ownership structure or control of the entity.

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If you don’t already know me, my name is Sonia Narvaez. I’m a licensed CPA and wealth-building strategist with over 25 years of experience.

If you have any questions about how to take advantage of the latest tax savings strategies, don’t hesitate to contact us.

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