What Is BOI Reporting? — Everything You Should Know
In business, change is the only constant. Whether it’s an unexpected demand drop, a change in your supplier’s pricing, or a new regulatory requirement – something is always changing.
Today, it’s BOI reporting – a regulatory requirement introduced by the IRS to increase transparency in the ownership and control of business entities active in the United States.
In this article, we delve into the details of BOI reporting. We take a look at what it is, help you find out if your business falls under this new requirement, and discuss how to make sure you're fully compliant.
Let’s get started.
What Is Beneficial Owner Information Reporting?
Beneficial Ownership Information (BOI) reporting is a new regulatory requirement created to increase transparency in the ownership and control of business entities. It mandates entities to disclose information about their beneficial owners, essentially the individuals who ultimately own or control the company.
It is relevant for entities established prior to 2024, which are given a specific deadline to comply. For new entities formed in 2024, they must report this information within 90 days of their creation. The primary goal of BOI reporting is to allow financial services and the IRS to validate the legitimacy of businesses, ensuring they are not used for illicit activities like money laundering or tax evasion.
While it didn’t even a year ago, BOI reporting has now become a pillar in maintaining corporate transparency and accountability in the business environment.
What Are the Requirements?
Businesses subject to BOI reporting should:
Identify beneficial owners – Businesses must identify individuals who own or control 25% or more of the entity or who exercise significant control over it.
Report details of company applicants – This includes providing information about the individuals who file the entity's creation paperwork, such as name, date of birth, and address.
Provide personal information – For each identified individual, personal details such as name, address, date of birth, and an identification number (e.g., Social Security number) must be reported.
Report changes – Any changes to the beneficial ownership information must be reported within a specified timeframe.
FAQ
To clear things up, we will now briefly answer some of the most frequently asked questions regarding this new form of reporting.
Does my company have to report its beneficial owners?
Your company needs to report if it's a "reporting company" as defined by the rule and not exempt. Most companies fit into this category, but not all. There are exemptions for certain types of entities, such as publicly-traded companies, certain regulated entities, and others that meet specific criteria.
Who is a beneficial owner of my company?
A beneficial owner is someone who owns or controls 25% or more of the company or has substantial control over it.
Does my company have to report its company applicants?
Yes, you need to report information about the people who filed your company's creation documents.
What specific information does my company need to report?
You'll need to provide names, birth dates, addresses, and a government-issued identification number (such as a social security number) for each beneficial owner and company applicant.
When and how should my company file its initial report?
Start filing from January 1, 2024. The deadline depends on when your company was created. Use FinCEN’s online system for filing.
What if there are changes to or inaccuracies in reported information?
Update FinCEN if there are any changes or errors in your previously reported information. You need to do this within a set period.
What to Do?
If you want to make sure your business is fully compliant with the new BOI reporting requirements, Ursa is here to help! We understand that navigating these new rules can be challenging.
Here’s what you should know for now:
Reports can be submitted starting January 1, 2024.
Businesses established before January 1, 2024, have until January 1, 2025, to file their initial reports.
Entities formed between January 1, 2024, and December 31, 2024, have a 90-day period from the notice of their creation to file.
Companies starting on or after January 1, 2025, must file within 30 days of their establishment.
At Ursa, we specialize in guiding businesses through these processes with ease and accuracy. That's why we offer a no-obligation, 30-minute consultation to assist you in understanding and meeting these obligations.
