To better track money laundering and its insidious implications to the safety of American citizens, Congress came up with a reporting tool. As a result, small business owners must file a report as part of the Corporate Transparency Act (CTA) of 2021, which was an addendum to the National Defense Authorization Act that year.
Beneficial ownership information (BOI) is a compliance requirement that some companies must complete. BOI filing is done with the Financial Crimes Enforcement Network (FinCEN), which is a division of the U.S. Department of Treasury. The BOI form is a way for the government to learn who indirectly or directly owns a privately held company. The Corporate Transparency Act requirements were designed to curtail the ability of dishonest bad actors hiding behind a shell company or otherwise maintaining secrecy about who actually benefits from the protection of an umbrella company or other legal entity.
If you’re unsure about the need for you to file a BOI form, talk to your small business accountant and strategic financial advisor at Miller & Company LLP. Besides doing your taxes to save you the most money and providing the financial expertise of a personal CPA, they can give you guidance on the new FinCEN rules regarding beneficial ownership information. Expect the best results from Miller & Co., with offices in Manhattan, Queens, Washington, DC and Sarasota, Florida.
Beneficial owners are individuals who, either indirectly or directly, have control over the company doing the FinCEN BOI reporting. The person who’s a beneficial owner either owns the business outright or controls more than 25 percent of the company’s interests.
You verify what’s referred to as substantial control through a few different ways, such as if the beneficial owner:
When filing the BOI report, you must provide certain information about the beneficial owner, such as:
Documents that provide the unique numbers identifying the beneficial owners may include:
Beneficial ownership information reporting began on January 1, 2024, when the FinCEN BOI e-filing website went live.
Two types of companies are required to file a beneficial ownership report for CTA accounting purposes. These are called “reporting companies” and include:
There are other business entities, such as trusts and nonprofits, that weren’t started by filing their status with a government body. These aren’t considered reporting companies. If you need to file a BOI for an LLC, Miller & Co. LLP can help you accomplish it.
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Canine StylesAs of its beginning in 2024, the Department of the Treasury has identified 23 types of companies that don’t have to file a BOI report. These are generally large corporations that already report to the government who their primary stakeholders are either through publicly traded company filings or through other reporting requirements.
Many financial institutions and other highly regulated industries already fall under the Corporate Transparency Act requirements and file regularly with the Securities and Exchange Commission (SEC).
Companies generally exempt include:
Additionally, large companies that employ 20 or more people, filed income taxes for more than $5 million and have a brick-and-mortar presence in the United States generally are exempt form the CTA accounting requirement. The FinCEN website goes into great detail with easy-to-follow instructions to help you determine if your company is exempt or not. Further questions should be addressed to your strategic business advisor at Miller & Co.
If your company is deemed a domestic or foreign reporting company created prior to January 1, 2024, you have until January 1, 2025, to file a BOI report. You have 90 days from the effective date of your company’s legal formation to file this accounting CTA form if you start a foreign or domestic reporting company after January 1, 2024.
Once the process gets rolling and companies and their financial advisors become accustomed to the FinCEN BOI rules, new companies forming after January 1, 2025, have 30 days to do their beneficial ownership information reporting.
Other basic BOI filing rules include:
Only a limited few have access to the information you provide on your beneficial ownership report. Those wishing to view the information you provided must submit a request through a designated government department. Information is stored in a secure database; it’s not available to the public.
Financial institutions automatically have access to the information most of the time when they have the consent of the company, as do financial institution regulators overseeing certain entities.
Others that may be granted access to the information on a BOI report include:
Beginning at the end of 2023, the Treasury Department — and FinCEN in particular — began what they call a “robust outreach and education campaign” to let small business owners know about this new rule.
They created a Small Business Compliance Guide and use a variety of avenues to spread the word, including through:
Treasury officials claim to be going all-out in an effort to spread the word about beneficial ownership information reporting. This is just another reason why you need to maintain a close working relationship with your accountant; don’t get left out of important new legislation like this. Spend your time running your business and let and your strategic advisors at Miller & Co. track any reporting issues as they arise, like the AICPA Corporate Transparency Act.
While you can rely on the guidance of your business advisors to help you file a BOI report for an LLC or other business entity, the form is quite simple and straightforward. The website provides ample guidance as well. You can even authorize your attorney or accountant to file the BOI on your behalf. They have to supply their own basic contact information if they do that.
No matter who files the report, you must get it done.
Penalties enacted by the Financial Crimes Enforcement Network for not filing the beneficial ownership report may include:
People make mistakes, so there are safe harbor exceptions available if you make an honest mistake. Those who willfully disregard the outreach efforts of the Treasury Department and refuse FinCEN BOI reporting requirements are the most likely to invoke penalties and possible prosecution. At the same time, providing false information about the beneficial owners of your company also makes you suspect in the eyes of the government and subject to fines and jailtime.
By following the guidance of your financial advisor and accountant at Miller & Co., you can comply with the beneficial ownership information reporting requirements in just a few minutes as long as you’ve gathered all the pertinent information about the beneficial owners. This is a one-time report that only needs to be updated if and when you make changes to the company beneficial ownership information, or your business becomes exempt.
Finally, beware of fraudulent scammers taking advantage of small business owners whenever new compliance rules like this take effect. Within the first few weeks of the new year, for example, FinCEN received reports of fraudulent notices going out to business owners under the guise of being an “Important Compliance Notice.” FinCEN never sends requests for information that is unsolicited, and they won’t provide a QR code or website link for you to click on for more information.
For the most accurate and up-to-date IRS and financial compliance rules, contact the closest office of Miller & Co. Contact the Office of the Inspector General if you feel you’ve received fraudulent communications.
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