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In 2021, the bipartisan Corporate Transparency Act was enacted by Congress to combat illicit finance. This legislation mandates specific types of U.S. businesses to disclose beneficial ownership information—identifying those who ultimately own or control them—to the Financial Crimes Enforcement Network (FinCEN), an agency under the United States Department of the Treasury.
The primary goal of the Beneficial Ownership Information (BOI) reporting Rule is to prevent unlawful activities such as money laundering, tax evasion, terrorist financing, and other illicit practices that may be disguised as legitimate small businesses.
1. Who Needs to Submit BOI Reporting?
Businesses that are typically required to report are known as "Reporting Companies." Your company may need to disclose information about its beneficial owners if it falls into one of the following categories:
- A corporation, Limited Liability Company (LLC), or any entity formed in the United States through filing with a secretary of state or a similar office.
- A Foreign Company registered to conduct business by filing in any U.S. state or a comparable office of a state or Tribe.
However, there are 23 types of entities exempt from reporting beneficial ownership information, including publicly traded companies, nonprofits, and certain large operating companies.
2. What Information is Included in the Beneficial Ownership Information (BOI) Report?
Irrespective of whether you own a small business or a large corporation, understanding the regulations concerning BOI reporting is crucial. A BOI report consists of four key elements, which are as follows:
The Reporting Type
When initiating the BOI report, the reporting company must select the type of report they are submitting. The various filing types include:
- Initial report: for the first BOI report filing.
- Correct prior report: to rectify inaccurate information on a previously filed BOI report.
- Update prior report: for changes in the information provided in the previous BOI report.
- Newly exempt entity: for companies initially required to provide specific details in BOI reports but are now exempt.
The Reporting Company
Reporting companies include those established in the U.S. or foreign entities registered to operate in the U.S. by filing with a secretary of state or equivalent office.
The Beneficial Owners
A beneficial owner is an individual who, directly or indirectly, exercises substantial control over a reporting company or owns or controls at least 25% of the ownership interests. Information required for a beneficial owner includes the individual's or entity's legal name, date of birth, address, and identification details.
3. Deadline for Submitting BOI Reports
FinCEN began accepting BOI Reports on January 1, 2024. The deadline for reporting BOI to FinCEN depends on the creation or registration date of the company. Deadline is Jan 1st 2025 for compliance deadline.
4. Simplify Your Company’s BOI Reporting with Aragon Tax Return Services
Completing the FINCEN BOI report accurately is a mandatory process. This guide aims to assist you in navigating the process smoothly. Remember, while the report is a one-time requirement, updates are necessary if there are significant changes in your business.
Compliance with the federal Corporate Transparency Act (CTA) is mandatory, and failure to comply may result in severe civil and criminal penalties. File your BOI report today with Aragon Tax Return Services.
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