Small business owners need to be aware of a new federal requirement – the Beneficial Ownership Information (BOI) reporting. This mandate, implemented by the Financial Crimes Enforcement Network (FinCEN), plays a pivotal role in promoting transparency and combating financial crimes. Let’s explore what this requirement means for your business and why it’s essential to comply.
What Is Beneficial Ownership Information Reporting?
The BOI reporting requirement obligates certain businesses to provide information about their beneficial owners to FinCEN. A “beneficial owner” is defined as an individual who either:
1. Exercises substantial control over the company, or
2. Owns or controls at least 25% of the company’s equity.
This information helps authorities prevent illicit activities such as money laundering and terrorist financing by increasing transparency around business ownership structures.
Who Needs to File?
The BOI reporting applies to most small businesses, including corporations, limited liability companies (LLCs), and other similar entities registered in the United States. Exemptions exist for certain larger or highly regulated entities, such as publicly traded companies, banks, and nonprofits. However, most small businesses that are not publicly traded or regulated under similar federal frameworks must comply.
You can file this yourself – you do not need to pay anyone to do this for you. In addition, the Hawai’i SBDC can help walk you through the process if you are unsure.
Here is the link to file your BOI: https://fincen.gov/boi
Key Benefits of Filing BOI Reports
1. Ensures Compliance
Filing BOI reports is a legal requirement under the Corporate Transparency Act (CTA). Non-compliance can result in severe penalties, including fines of up to $500 per day of violation and potential criminal charges. By adhering to this mandate, your business avoids legal and financial repercussions.
2. Strengthens Business Integrity
Transparency in ownership builds trust with stakeholders, including investors, partners, and customers. Complying with BOI reporting demonstrates your commitment to ethical practices, enhancing your reputation in the marketplace.
3. Contributes to a Safer Business Environment
By providing accurate ownership information, you contribute to a broader effort to combat financial crimes. A transparent business ecosystem fosters a fairer and safer environment for all entrepreneurs.
What Information Do You Need to Provide?
To fulfill the BOI reporting requirement, you must disclose:
- Full name of each beneficial owner
- Date of birth
- Residential or business address
- A unique identifying number from an acceptable identification document (e.g., driver’s license or passport)
When and How to File
FinCEN requires BOI reports to be filed electronically through its online portal. Businesses created or registered after January 1, 2024, must file their BOI reports within 30 days of registration. Existing businesses have until January 1, 2025, to submit their initial reports.
Here is the link to file your BOI: https://fincen.gov/boi
Final Thoughts
Filing Beneficial Ownership Information reports may seem like another regulatory hurdle, but it’s an essential step in maintaining compliance and contributing to a transparent business environment. For small business owners, understanding and meeting this requirement is vital to avoid penalties and build a reputation for integrity.
Here is the link to file your BOI: https://fincen.gov/boi
If you’re unsure about your filing obligations or need assistance, the Hawai’i SBDC is here to help.