Brush Up on Beneficial Ownership Information Requirements

Brush Up on Beneficial Ownership Information Requirements

February 07, 2024

With the new year comes many updates in our world of tax and accounting work at Strojny Financial Services. Most of them we take care of when we prepare your tax return, but there are a few that apply directly to our business clients. One of those is mandatory beneficial ownership information (BOI) reporting that begins this year.[1]

The BOI filing obligations stem from the 2021 Corporate Transparency Act (CTA) and went into effect January 1, 2024.[2] All businesses registered with secretaries of state or tribal authorities, including single member LLCs and Schedule C filers, must file their BOI with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

The purpose of the CTA is to help the government reduce illegal financial activities by requiring many companies, both foreign and domestic, that are conducting business in the U.S. to report information about the individuals who own or control the entity. This allows FinCEN and law enforcement entities to help locate and capture parties responsible for money laundering, financing terrorist groups and other financial crime.

Businesses formed before January 1, 2024 must complete the filing by January 1, 2025. Any companies created on or after January 1, 2024 and before January 1, 2025 must submit the paperwork within 90 days. Businesses formed on or after January 1, 2025 must report BOI within 30 days. Similarly, any changes to the required information about the company or its owners must be conveyed in an updated BOI report within 30 days of the change.

There are exceptions to the reporting mandate that include public companies, banks, credit unions, broker-dealers, securities exchanges, investment advisors, venture capital fund advisors, insurance companies, accounting firms, tax-exempt entities and more. For a complete list, visit natptax.com.

BOI reports come with civil penalties of up to $500 per month for late filing and criminal penalties of up to $10,000 and two years in prison for any individual failing to file. Strojny Financial Services will file these reports for our clients upon request only for a fee of $100. We will not file these firms automatically on behalf of the any client, so please contact us if you are interested in having your paperwork completed for you.

[1] natptax.com 2024
[2] irs.gov 2023