As we discussed in a previous email, effective 01/01/2024, most small businesses are required to report beneficial ownership information (BOI) to the federal government. The required report is submitted electronically to the US Treasury Financial Crimes Enforcement Network (FinCEN) via their website at www.fincen.gov.
What is a Reporting Company (RC)?
Any entity created by filing registration documents (such as articles of organization or incorporation) with a secretary of state or other similar government office is a RC. These include corporations, LLCs, Limited Partnerships, Statutory Trusts and Foundations. There are some entities exempt from filing, such as banks, tax exempt organizations, securities brokers/dealers, certain large organizations and certain inactive entities.
Who is a Beneficial Owner (BO) of an RC?
A BO is any individual who directly or indirectly either:
Exercises “substantial control” over the RC, or
Owns at least 25% of the RC.
According to the reporting rules, there are numerous ways an individual can exercise “substantial control” over the RC, which makes that person a BO subject to reporting.
What must be reported to FinCen?
The RC and a list of all of its BOs must be reported to FinCen. RC info must include company name, physical address, state of formation and EIN. Information on each BO must include the person’s full name, physical address, DOB and an identification number from a state driver’s license or US passport. An image of the driver’s license or US passport must also be provided.
When is the report due?
RCs created before 01/01/2024 have until 01/01/2025 to submit their BOI report. RCs created after 01/01/2024 have 90 days from filing registration documents with the secretary of state to submit their BOI report. In addition, RCs created after 01/01/2024 must provide the same personal information about the Company applicant(s) as its BOs. The RC applicant is the person who files the registration documents with the secretary of state.
Is updated information required to be reported?
Yes, after the initial BOI report is submitted, any changes to the previously reported RC or BO information as well as future additions of BOs to a RC must be reported within 30 days. This includes a BO address change. For example, if a BO moves from one residence to another, the address change must be reported within 30 days.
Can you be penalized for not filing a BOI report or not updating a BOI report?
Yes, penalties for not submitting the BOI report and/or not reporting all BOs can be severe. You can be penalized $500 per day, with no maximum limit, for not filing your BOI report by the deadline. You can also be subject to criminal penalties of imprisonment and up to a $10,000 fine.
What should you do now?
Ultimately it is your responsibility to file an accurate BOI report with FinCen. It is not overly complicated or difficult. You must accumulate the required information on the RC and all if its BOs. Then go to www.fincen.gov to complete the report. You must provide a scanned copy of a government ID for each BO so get these before you start.
A separate BOI report for each RC must be submitted. If you own more than one business that is considered a RC, a separate BOI report must be submitted for each one.
If you are a BO of more than one RC, we strongly recommend you go to the website and apply for an individual FinCen ID#. You do this by providing all the personal infor required for a BO, including the scanned copy of the picture ID. FinCen then provides you with a 12 digit FinCen ID# specific to you. Then when you file the BOI report for any RC, you simply provide your FinCen ID# for you as the BO. You can provide this one ID# for each RC of which you are a BO.
Can you hire someone to do this for you?
Yes, you can either file a required BOI report yourself or hire CPA Consulting Group to do it on your behalf. If you hire us, then you must provide us with all the information listed above for each RC and each BO of the RC, including a scanned copy of a picture ID for each BO. Do not assume CPA Consulting Group will file a BOI report for you. You must call or email us to make specific arrangements for us to file a required BOI report. CPA Consulting Group assumes no responsibility for filing a required BOI report.
As always you can call us at 307-577-4040 or email us with any questions or to discuss further.
