Beneficial Ownership Information (BOI) Report

A BOI rule is meant to make the companies more transparent and serve in the prevention of money laundering, fraud, financing of terrorism, and other financial crimes. Small LLCs that are single member, in many cases, require filing.

What Is a Beneficial Owner?

Any person is a beneficial owner provided that he:

• is a shareholder or a majority shareholder of 25 percent or more, or
• Holds a lot of influence on the company.

Substantial Control: includes:

• Top management (CEO, President, CFO, Managing Member, etc.)
• Those with a mandate to add and take away the top-ranking officers.
• Anyone who orders, dictates or plays a significant role in determining the key decisions in the company.

Depending on the structure of your company, you can have several good owners.

Who Is Required to File?

A majority of the small and medium enterprises are obliged to submit a report to BOI unless a certain exemption applies.

Companies Included Which Generally Should File:

• Single-member LLCs
• Multi-member LLCs
• Corporations
• Foreign corporations who are registered to conduct business in the U.S.
• Asset-holding LLCs and companies owning assets.

Common Exemptions Include:

• Big operating companies exceeding employee and revenue benchmarks.
• Publicly traded companies
• Banks and credit unions
• Insurance companies
• SEC-registered entities
• Nonprofit making organisations that are tax-exempt.

In a case when your company does not obviously have an exemption, the company is likely to file.

What Does Information Need To Report?

There are two types of information contained in the BOI report:

1. Company Information

• Legal business name
• Any DBA or trade names
• Current U.S. business address
• State/ jurisdiction of formation.
• Tax ID or Employer Identification Number (EMPN).

2. Controlled by Beneficial Owner Information

On behalf of every beneficial owner, you need to present:

• Full legal name
• Date of birth
• Home address (no P.O. Box)
• ID number (issued by the government in the form of a driver license, passport, and so on).
• A photograph of the identification card.

In the case of new companies, information regarding the company applicant (who submitted the formation documents) might be needed as well.

Filing Deadlines

The deadline of filing is dependent on the date of the formation of the company. Generally:

• It has to be submitted by the relevant federal deadline by the existing companies.
• New companies should be registered within a certain period after the establishment.
• In the event of change in ownership or control information, the updates have to be submitted at an early stage.

In case of a beneficial ownership change, a change in the address, name or identification, a new report should be filed within the necessary update period.

Is There a Filing Fee?

No. Submission of BOI report to FinCEN is free.

Sanctions against Non-Compliance

Late filing, missing filing or false filing may lead to:

• Daily civil penalties
• Significant monetary fines
• Possible criminal punishment in the instances of willful violations.

Accuracy is critical. Even when one makes errors accidentally, it is important to rectify them in order to prevent inconveniences.

Significant Compliance Issues

• The BOI report is a federal one, irrespective of the state in which you have established your LLC.
• Privacy protection at a state level does not spare you of federal reporting.
• You might be required to make a filing even when your LLC has no income, does not have any employees, or it has not been operational.
• This report is not always filed in your behalf by registered agents unless they are specifically engaged to do so.

Real-life Advice on LLCs

• Email ownership documents and operation agreements and then file.
• Fraudulently verify ownership percentages.
• Check the IDs and the names twice.
• Record the confirmation of your filing to make compliance.
• Periodically review your ownership structure to be updated on a timely basis in case of change.

Final Thoughts

Nowadays, Beneficial Ownership Information (BOI) Report has become a significant element of the continuous business compliance of numerous LLC and corporations. It will enhance financial system transparency and integrity in the U.S.

Since the rules may be utilized even to the smallest companies, it is necessary to understand whether your company is obliged to file and present any information provided there is complete and accurate. In case of uncertainty, a skilled business lawyer or compliance expert should be sought to ensure that there is full compliance.