Beneficial Ownership Reporting - Info and How To Do It
You may be aware already of the upgraded requirements for most entities formed in the US to report on beneficial ownership requirements through the news or various other websites. In case you aren’t aware, we prepared this nifty little article for you to read to understand what’s required.
Entities Mandated to File
Entities obligated to file a BOI report encompass:
Domestic reporting companies, including corporations, LLCs, or other entities established by filing with a secretary of state or similar office under state or tribal laws.
Foreign reporting companies, being corporations, LLCs, or other entities formed under foreign country laws, registered to do business in any state or tribal jurisdiction via filing with a secretary of state or similar office.
Exemptions from Filing
The BOI reporting requirement exempts 23 entity types, many of which are already under federal or state regulation and disclose their BOI to a government authority. These exempt entities range from banks and insurance companies to SEC-registered entities, utilities, and 501(c) tax-exempt organizations. Additionally, entities that are inactive also qualify for exemption.
Notably exempt is any large operating company employing over 20 full-time employees, generating over $5 million in gross receipts or sales, and maintaining a physical office presence within the United States.
Reporting Requirements
Entities formed or registered from January 1, 2024, onwards must report details about themselves, beneficial owners, and company applicants.
Entities existing before January 1, 2024, are to report on themselves and beneficial owners, excluding company applicants.
Defining Beneficial Owners
A beneficial owner refers to any individual directly or indirectly wielding significant control over or owning a considerable portion (25 percent or more) of the entity's interests. Determination of substantial control is based on the influence wielded over critical decisions.
Company Applicants
This category includes up to two individuals: one who directly files the creating or registering document, and one primarily overseeing the filing.
Entities formed or registered post-January 1, 2024, will need to include company applicant information.
Required Information
Entities must report their full legal name, trade names, principal business address, jurisdiction of formation or registration, and Taxpayer Identification Number (TIN). For beneficial owners or company applicants, full legal names, dates of birth, addresses, unique identifying numbers from valid identification documents, and the issuing state or jurisdiction are required.
Filing Deadlines
For entities established before January 1, 2024, the initial report is due by January 1, 2025.
For entities formed between January 1, 2024, and December 31, 2024, reports are due within 90 days of notification of their establishment.
Post-January 1, 2025, entities must file within 30 days of formation.
Subsequent updates or corrections to reported information have specific deadlines based on changes or discovery of inaccuracies.
Penalties for Non-compliance
Failure to comply with the BOI reporting requirements can result in civil penalties up to $500 per day, reaching up to $10,000, and possibly up to two years of imprisonment for willfully providing false information or failing to report accurately.
Reach out to us if you need assistance with filing this report.
