BOI Reporting: What Every Business Owner Needs to Know

BOI Reporting: What Every Business Owner Needs to Know

BOI Reporting: What Every Business Owner Needs to Know

As of January 1, 2024, small businesses have a new government reporting requirement they need to meet. If reading those words made you break into a cold sweat, worry not. We’re going to break down everything you need to know about beneficial ownership (BOI) reporting, the new requirements, and how to breeze through compliance (yes, it’s possible). 

What is BOI Reporting?

BOI reporting provides the federal government with identifying information about individuals who directly or indirectly control a company. It is a new government effort to increase corporate transparency and strengthen government oversight of financial activities. 

The Beneficial Ownership Information Reporting Rule, enacted under the Corporate Transparency Act, went into effect on January 1, 2024. 

It has 3 key objectives:

  1. Enhanced transparency: The BOI rule seeks to enhance transparency within the corporate landscape, enabling the government to see the people behind the businesses (aka individuals who own or control a corporate entity). 
  2. Combat Financial Crimes: BOI reporting aims to help prevent money laundering, terrorist financing, and corruption. Identifying beneficial owners will help legal authorities disrupt criminal networks and mitigate the risks associated with illicit financial activities. 
  3. Facilitate Law Enforcement Efforts: BOI reporting will enable authorities to trace the proceeds of criminal activities and hold accountable those responsible for illicit conduct. 

BOI Reporting 101: Understanding the Language 

Let’s take a minute to demystify the jargon before we go any further. Here are the key terms you need to know:

Beneficial owner: A beneficial owner is an individual who either directly or indirectly: (1) exercises substantial control over a reporting company or (2) owns or controls at least 25% of a reporting company’s ownership interests. Trusts, corporations, or other legal entities are not considered beneficial owners (beneficial owners must be individuals).

Beneficial ownership information (BOI): Identifying information about individuals who directly or indirectly control a company. 

Financial Crimes Enforcement Network (FinCEN): A bureau of the U.S. Department of the Treasury that safeguards the financial system from illicit use, combats money laundering and related crimes, and promotes national security through the collection, analysis, and dissemination of financial intelligence. 

How the BOI Reporting Rule Affects Small Businesses

The biggest implication for small business owners is the increased compliance burden — almost every small business is required to submit a BOI report to FinCEN. Failure to submit the required information by the deadlines or comply with reporting obligations may result in penalties and sanctions. 

Who Needs to File a BOI Report?

If your business is a registered corporation, limited liability company (LLC), or other small business entity, you may need to file a BOI report. 

Sole proprietors do not need to file a BOI report. This is because a sole proprietorship is not an entity created or registered in the US by filing with a secretary of state or similar office. As such, it is not considered a “reporting company.”

How Often Do You Need to File?

BOI Reporting is a one-time process with some exceptions. If your ownership or business structure changes, you need to update your BOI Report. Otherwise, you may fall out of compliance. 

Companies like Dibble offer cost-effective, ongoing compliance monitoring to make sure your business doesn’t fall out of compliance with the BOI Reporting requirements. If a specific event (like a change in ownership) causes your business to fall out of compliance, they’ll update your BOI report on your behalf so you stay in good standing with FinCEN. 

What’s in a BOI Report?

A BOI report includes:

  • Identification of the beneficial owners.
  • Disclosure of beneficial ownership information (BOI), including name, address, date of birth, and social security number or passport number. (Businesses must also provide information about the nature/extent of a beneficial owner’s interest in the entity).
  • Certification and attestation that the information provided is complete and accurate.

What Happens If You’re Not Compliant?

BOI non-compliance carries risks. Under the Beneficial Ownership Information Reporting Rule, non-compliance carries the following risks:

  1. Criminal penalties: Willful failure to adhere to the reporting obligations or provide accurate information to the FinCEN can result in criminal prosecution and up to 2 years imprisonment. 
  2. Civil penalties: Businesses that fail to comply may be subject to civil penalties, including fines of up to $10,000 per violation. 
  3. Daily fines for inaccurate reporting: If the information provided is deemed inaccurate or incomplete, fines of up to $500/day may be levied for each day that the report remains inaccurate or deficient. 

BOI Reporting Deadlines for 2024

  • For businesses formed before January 1, 2024, the general deadline to file the Beneficial Ownership Information Report is December 31, 2024.
  • Businesses formed on or after January 1, 2024, are granted a 90-day window after their formation date to file the BOI Report.
  • Businesses that make amendments to their formation documents after January 1, 2024, are required to submit a new BOI Report within 30 days of the amendment. This ensures that any changes to the ownership or control structure of a business are promptly reflected in the reporting framework.

How to Breeze Through BOI Reporting

Believe it or not, compliance is just a hop, skip, and a jump away. Dibble lets you skip the hassle, file with confidence, and avoid fines and penalties. 

When you work with Dibble, we file the BOI report for you so that you can stay compliant and save time. Businesses trust Dibble because we offer:

  • Accurate BOI reporting: Dibble’s experts ensure your filing is error-free, so you can feel confident that your BOI report is in compliance. 
  • Fully encrypted filing: Your information is safe and secure. Dibble is a FinCen-authorized API participant, and we’ll never sell your data. 
  • Hassle-free process: Answer a few questions, and we’ll take it from there. We’ll focus on the report, so you can focus on what matters—running and growing your business. 

The best part—Dibble is cheaper than a single day of non-compliance. Ready to skip the headache and stay compliant? Use Dibble to file your BOI report now.

This article was originally written on June 27, 2024.

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