Important Update on Beneficial Ownership Information (BOI) Reporting Requirements

By Brian Sauers, CPA and David Edmondson, CPA

Davie Kaplan is dedicated to keeping you informed about critical regulatory changes that may impact your business. This year, new requirements for Beneficial Ownership Information (BOI) reporting under the Corporate Transparency Act (CTA) became effective. These rules, designed to enhance transparency and combat financial crimes, apply to a broad range of businesses across the United States. Here’s what it means for your business and to ensure compliance.

The Corporate Transparency Act (CTA), enacted in 2021, imposes strict reporting obligations on certain businesses regarding their beneficial owners. A beneficial owner is an individual who, directly or indirectly, exercises substantial control over a business or owns at least 25% of the entity’s ownership interests. This definition also includes individuals who may not directly own shares but have significant influence or control over business decisions.

Under the CTA, corporations, limited liability companies (LLCs), and similar entities formed under state or tribal law are required to report their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). This reporting is designed to prevent unlawful activities, such as money laundering and fraud, by increasing transparency in business ownership structures.

The BOI report must include key details for each beneficial owner, including their full legal name, date of birth, and other identifying information. For companies formed on or after January 1, 2024, the report must also include information about company applicants, who are individuals involved in the formation or registration of the entity.

Reporting deadlines for BOI reporting vary based on when the business was formed. For entities established before January 1, 2024, the deadline is January 1, 2025. Entities formed in 2024 must report within 90 days of formation, while those formed after December 31, 2024, have 30 days to comply.

It’s crucial to meet these deadlines to avoid penalties, which could include fines and potential criminal charges for willful noncompliance.

Not all businesses are subject to these new reporting requirements. Certain entities not formed by filing a document with a secretary of state or similar office, and certain entities already subject to federal reporting such as publicly traded companies are generally exempt. Additionally, businesses with more than 20 full-time U.S.-based employees, over $5 million in revenue, and a physical presence in the U.S. may also qualify for exemptions.

Compliance with the BOI reporting requirements is not just about meeting legal obligations—it’s also about protecting the integrity of your business and avoiding significant penalties. While Davie Kaplan does not provide legal services related to BOI reporting, we strongly recommend consulting with your attorney or a qualified regulatory compliance professional to ensure your filings are accurate and timely.

For more detailed information, including examples and additional guidelines, you can refer to the Davie Kaplan’s BOI Reporting Guide, which offers a comprehensive overview of the BOI reporting requirements.

If you have any questions or need further clarification on how these new regulations might affect your business, please reach out to us.