Is your business subject to the new BOI reporting rules?
The Corporate Transparency Act expanded anti-money laundering laws and created new reporting requirements for certain companies doing business in the U.S. Beginning in 2024, many small businesses are required to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) in an effort to create a national database for use by national security and law enforcement agencies to prevent the use of shell companies for criminal activity.
Special Offer
Stonehenge Compliance, PLC was established by Stonehenge Consulting, PLC, to support clients with Beneficial Ownership Information (BOI). To assist you with these new filing requirements, we are offering a promotional $300 filing fee instead of the regular $400 fee from now until October 1, 2024. This is the perfect time to ensure compliance at a reduced cost.
Who Must File
Both domestic and foreign reporting companies are required to file reports. A company is considered a reporting company if a document was filed with the Secretary of State (SOS) or similar office (i.e. LARA for the State of Michigan) to create or register the entity. Corporations (including S corporations), LLCs, and other entities formed through the SOS or similar office are subject to the reporting requirements. However, sole proprietorships, trusts, and general partnerships, which do not require filing a formal document with the SOS or similar office, generally are not considered reporting companies and will not have a filing requirement. Foreign companies are required to file reports if they are registered with the SOS or similar office under state law.
Some companies are exempt from reporting, but many exempted companies are already required to report ownership information to a governmental authority. Of particular interest to you may be the exemption for large operating companies. A large operating company is any entity with:
More than 20 full-time US employees – AND –
An operating presence at a physical office within the U.S. – AND –
More than $5,000,000 of U.S.-sourced gross receipts were reported on the prior year's federal income tax return.
If you meet all these qualifications above, you are not subject to the new reporting requirements.
Information that Must be Provided
Beneficial Ownership Information (BOI) must be reported for the reporting company’s beneficial owners and company applicants. BOI includes an individual’s full legal name, date of birth, street address, and a unique ID number. The unique ID number can be from a non-expired U.S. passport, state driver’s license, or other government-issued ID card. If the individual does not have any of those documents, then a non-expired foreign passport can be used. An image of the document showing the unique ID number must also be uploaded with the report.
Beneficial Owners
Two groups of individuals are considered beneficial owners of a reporting company:
Any individual who directly or indirectly owns or controls at least 25% of the ownership interests of the reporting company.
Any individual who exercises substantial control over the reporting company.
Individuals with substantial control are those with significant influence over important decisions about a reporting company’s business, finances, and structure. Senior officers (president, CFO, general counsel, CEO, COO, and any other officer who performs a similar function) are automatically deemed to have substantial control, as are individuals with the authority to appoint or remove senior officers and board members. There is no requirement that these individuals have actual ownership in the company to be considered a beneficial owner for reporting purposes.
Company Applicants
The company applicant is the person who files the document that creates or registers the reporting company (e.g., an attorney or CPA). Company applicants must provide the same information that beneficial owners require, but only if the reporting company is formed or registered after 2023. Because of the difficulty in tracking down information about company applicants for reporting companies that have been in existence for several years, reporting companies formed or registered before 2024 do not have to supply BOI for their company applicants.
FinCEN Identifiers
Individuals and reporting companies can request a FinCEN Identifier (FinCEN ID) to use in place of supplying detailed information on the report. A FinCEN ID is a unique number assigned by FinCEN which is obtained by submitting the same information as is required of a beneficial owner or reporting company. A FinCEN ID may be useful to individuals who prefer to send their personal information directly to FinCEN rather than through a reporting company, or to individuals that may be required to supply information as a beneficial owner or company applicant of several reporting companies. We recommend getting a FinCEN ID if you have more than one filing requirement. If you need assistance with obtaining your FinCEN ID, we are happy to help you.
Important Filing Dates
For existing reporting companies created or registered before 2024, the initial report is due by January 1, 2025. For reporting companies created or registered in 2024, the initial report is due 90 days after the entity’s creation or registration. For reporting companies created or registered after 2024, the initial report is due 30 days after the entity’s creation or registration.
If there is a change to previously reported information about the reporting company or its beneficial owners, an updated report must be filed within 30 days of the change. So, your company must implement a system to identify reportable changes and file an updated report with FinCEN promptly. The penalties for willfully failing to file both initial and updated reports are steep—$500 per day that the report is late, up to $10,000, and imprisonment for up to two years.
We urge you to review these requirements and ensure compliance to avoid penalties. Should you have any questions or need assistance, please do not hesitate to contact us.
