You’ve probably heard about BOI (Beneficial Ownership Information), but don’t quite know what it’s all about, or how it can affect your company.
🛑 Don’t worry, we’ll answer some of your questions here – let’s get started!
🔹 What is BOI reporting?
✅ The Beneficial Ownership Information (BOI) Report is an update that some companies will have to file on a mandatory basis. It will be required by FinCEN, the U.S. Treasury’s Financial Crimes Enforcement Network, beginning January 2024. BOI makes it possible to identify information about individuals who own or receive benefits from a company, either directly or indirectly.
🔹 Do I have to file a BOI every year?
✅ No. This report should only be processed and filed once, unless the information initially reported needs to be updated at a later date.
🔹 What is the purpose of the BOI report?
✅ The objective is to obtain accurate and relevant data to assist in the fight against money laundering and the financing of criminal activities such as terrorism, drug trafficking, and tax evasion, and arises from the Corporate Transparency Act (CTA), which was enacted in the United States in 2021.
🔹 Who has access to the information in my company’s BOI report?
✅ The Corporate Transparency Act authorizes FinCEN to disclose report information to five general categories of recipients: federal government agencies; foreign law enforcement agencies; financial institutions; federal functional regulators; and the U.S. Treasury Department.
🔹 Who must file the BOI report?
✅ The legislation specifies two types of companies that must file the report: U.S. companies (single member llc, partnership, s-corp, corporations) and foreign companies incorporated under the law of another country that have registered to do business in the United States.
🔹 What are the deadlines for filing the BOI report?
✅ Companies that were created before January 1, 2024, have one year to file their BOI report. This deadline runs from January 1, 2024 to December 31, 2024. In the case of companies registered after January 1, 2024, the deadline to comply with the report is 30 days, following the notification of their registration.
🔹 What information must be filed with the BOI?
✅ Updated information about the individuals who are beneficiaries of the companies is declared in the BOI. For each one, the company will have to report: the individual’s name, date of birth, residential address, identification number (passport or U.S. driver’s license), and copy of the image of the identification document.
🔹 How many times must it be submitted?
✅ The BOI is a one-time filing; it is not an annual requirement.
🔹 Who are the beneficial owners of my company?
✅ A beneficial owner is a person who exercises substantial control, directly or indirectly, over the company about which it is reported. However, the regulations also include persons who own or control at least 25% of the company’s shares.
You may also like: Tax Saving Moves You Can Make Before the End of the Year
🔹 What does it mean to have substantial control over the company?
✅ The regulations recognize that substantial control can be exercised in four different ways:
- By holding a senior position in the company, such as president, chief financial officer, lawyer, chief executive officer, chief operating officer or any other position performing a similar function.
- By having the authority to appoint or remove certain representatives of the company or a majority of the directors of the reporting company.
- By being a significant participant in decision-making in the reporting enterprise.
- By having any other form of substantial control over the company, even if the structure of the company is more flexible than those in the previous points.
🔹 How does this regulation affect my company?
✅ The filing of this document should not alter the operation of your company. The only case in which this new regulation could affect you is if you do not comply with it.
🔹 Are there civil or criminal penalties?
✅ In the case of failure to file beneficial ownership information in the BOI registry, those involved could face civil and criminal penalties. If the error or omission is corrected within 90 days of the original reporting deadline, the penalty can be avoided. Criminal penalties include up to two years in prison.
🔹 Are there penalties if the BOI is not filed?
✅ If there is deemed to be an intentional failure to comply, penalties can result in fines of $500 for each day of non-compliance.
🔎 Finally.
BOI is yet another exponent on the importance of being aware of and properly understanding new developments in the U.S. legal and business system. Failure to do so can put your company at risk, and these regulatory changes can arise at any time.
🔸 That is why, both for the creation and maintenance of a company in the U.S., we recommend you to get advice from experts. At Wave Tax we can advise you on everything related to your company’s finances. Contact us at info@wavetax.us