Beneficial Ownership Information (BOI) Reporting Requirements

Oct 23, 2023

What is BOI Reporting?
Beneficial Ownership Information (BOI) Reporting is a framework developed by the Financial Crimes Enforcement Network (FinCEN) that mandates certain businesses to disclose specific information about their “beneficial owners.” The new reporting guidelines were formed as an effort to enhance financial transparency and curtail illicit financial activities by illuminating the individuals who own or control certain foreign or domestic entities registered to do business within the U.S.

Who is Required to Report Beneficial Ownership Information?
Domestic companies required to report include corporations, LLCs, and other similar entities formed through the registration with a secretary of state or similar office. Certain entities, such as large companies with over 20 million dollars in revenue, those that employ more than 500 full-time employees, and entities that operate under extensive regulatory scrutiny, among others, may be exempt from BOI reporting. In total, there are 23 types of entities exempt from reporting requirements, making it extremely important to carefully review FinCEN’s qualifying criteria, (published in their Small Entity Compliance Guide,) before concluding that your company is exempt.

Key Reporting Elements Defined

  • Beneficial Owner(s): the FinCEN defines Beneficial Owners as individuals who own or control (either directly or indirectly,) at least 25% of the ownership interest in a reporting company, or hold “substantial control” over the company.
  • Substantial Control: according to the FinCEN, an individual holds substantial control over a reporting company if the individual meets any of four general criteria:
    • The individual is a senior officer;
    • The individual has authority to appoint or remove certain officers or a majority of directors of the reporting company;
    • The individual is an important decision-maker; or
    • The individual has any other form of substantial control over the reporting company.
  • Required Reporting Information: includes the name, date of birth, address, and an identifying number (e.g., a driver’s license or passport number) of each beneficial owner, as defined above.
    Reporting Timelines
  • Existing Entities: Business that were formed as of January 1, 2024, must submit an initial BOI report by January 1, 2025.
  • New Entities: Those businesses created or registered after January 1, 2024, must report within 30 days of creation/registration.
  • Updates: Any changes or updates to a business’s BOI structure must be reported within 30 days of occurrence.

How to Report Beneficial Ownership Information
BOI reports must be submitted electronically through FinCEN’s secure, online filing system, which will be accessible starting January 1, 2024. FinCEN is currently not accepting any beneficial ownership information reports.

Next Steps

  • Identify and verify Beneficial Owners: Ensure you have accurate, verifiable information for all individuals who hold a significant interest or control in your company.
  • Understand your reporting obligations: Dive into the specifics of what information needs to be reported and acquaint yourself with the reporting formats and guidelines included in the Small Entity Compliance Guide linked above.
  • Engage Professional Assistance: Consider connecting with WVC’s team of tax advisors who continue to remain on top of BOI reporting mandates to ensure accurate and timely filing.
  • Stay Informed: Sign up for WVC Insights to receive regular updates and additional guidance on BOI reporting guidelines to ensure your business maintains continuous compliance.

Concluding Thoughts
Complying with BOI reporting requires businesses to exercise diligence in maintaining accurate records, understand the mechanics of the reporting framework, and exhibit punctuality in submissions. Strategic partnerships with professional experts can help pave the way for seamless compliance and fortified financial transparency.

Ensuring that your business is well-prepared to successfully navigate both BOI reporting mandates and other critical tax updates is William Vaughan Company’s top priority. Connect with a trusted WVC tax advisor today to see if your business qualifies to report on Beneficial Ownership Information under the updated framework.

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Categories: Tax Compliance