BOIR First Filing Deadline: What to Do Before It Arrives
The Beneficial Ownership Information Reporting (BOIR) deadline is rapidly approaching, and businesses in the United States must take action to ensure they comply with the new regulations. For many companies, this will be the first time they will need to file this type of report. Failure to meet the deadline could result in penalties and potential legal issues, making it crucial for business owners and managers to understand what needs to be done before the filing date arrives.
What is BOIR?
The Beneficial Ownership Information Reporting (BOIR) is a regulation put in place by the Financial Crimes Enforcement Network (FinCEN) under the Corporate Transparency Act (CTA). The CTA was enacted in 2021 as part of the National Defense Authorization Act (NDAA). The primary goal of BOIR is to combat money laundering, tax evasion, and other illicit financial activities by increasing transparency in business ownership.
Under BOIR, certain types of companies are required to disclose their beneficial owners to FinCEN. A “beneficial owner” is generally an individual who directly or indirectly owns or controls at least 25% of a company or has substantial control over it. This could include company executives, directors, or shareholders.
These regulations apply to both domestic and foreign entities operating within the U.S. and will help authorities track financial flows and prevent the use of shell companies for illegal activities. The deadline to file this information is fast approaching, and it is important to act promptly to avoid penalties.
Key Dates and Deadlines
The first filing deadline for BOIR compliance is set for January 1, 2025. However, some companies may be required to file earlier if they are formed or registered after January 1, 2024. If you are the owner or manager of a business, it’s essential to understand whether your company needs to submit a filing and to take steps toward ensuring you meet the deadline.
Who Needs to File?
The BOIR filing requirements affect a wide range of businesses in the U.S., including:
- Domestic Corporations and LLCs: All U.S.-based companies must file unless they meet an exemption.
- Foreign Companies: Foreign companies that are registered to do business in the U.S. must also file if they have a presence in the country.
- Exemptions: There are certain exemptions for large, regulated entities such as publicly traded companies, regulated financial institutions, inactive entities, and some large operating companies.
To determine whether your business is required to file, you need to evaluate the type of entity you operate and check whether it qualifies for any exemptions under the CTA.
Steps to Take Before the Deadline
If your business is required to file, here are the key steps to take before the BOIR filing deadline arrives:
1. Identify Beneficial Owners
The first step is to identify the individuals who qualify as beneficial owners of your company. These are the individuals who own or control at least 25% of the business or exercise significant control over it. In some cases, this may involve reviewing the company’s ownership structure and financial records to ensure that all relevant individuals are identified.
Be sure to gather the following information about each beneficial owner:
- Full name
- Date of birth
- Address
- Identification numbers (e.g., passport number, driver’s license number, or other government-issued ID)
This may seem straightforward, but for some companies with complex ownership structures, it could require more in-depth analysis. Consulting with a legal or financial professional is advisable to ensure accuracy.
2. Review Your Company’s Structure
Once you have identified your beneficial owners, it’s important to review the structure of your company. This includes understanding the shareholding patterns and the relationships between owners, shareholders, directors, and officers. If your business has multiple layers of ownership, determining who is the ultimate controlling person may require careful scrutiny.
Make sure that the information regarding each beneficial owner is accurate and current, as any discrepancies could delay the filing process or result in compliance issues later on.
3. Gather Required Documentation
In addition to the information about your beneficial owners, you will also need to collect certain documents to verify the ownership structure. This might include corporate records, shareholder agreements, or other documents that confirm ownership percentages or control over the company.
You should also ensure that any foreign entities associated with your business are properly documented, as they too may need to file a BOIR report if they have a U.S. presence.
4. Prepare for Digital Submission
The BOIR filing must be done electronically through the FinCEN’s online portal. As a result, businesses should familiarize themselves with the portal and the process for submitting their filings. The system will require you to upload the necessary documentation and enter information about your beneficial owners.
If you are unfamiliar with the submission process, consider reaching out to FinCEN for guidance, or seek professional assistance to avoid delays.
5. Monitor Changes to Ownership or Control
After filing, your business is required to update FinCEN if there are any changes to the beneficial ownership or control of the company. This means that if there are any changes in ownership percentages, new shareholders, or executives with significant control, you will need to submit an updated report to keep the information accurate.
Regular monitoring of your company’s ownership structure will help ensure compliance and keep your records up to date.
6. Understand the Penalties for Non-Compliance
The penalties for failing to comply with BOIR regulations can be severe. Businesses that do not file on time or provide accurate information could face:
- Civil penalties: Fines of up to $500 per day for failure to file.
- Criminal penalties: In extreme cases, companies and individuals could face criminal charges and penalties, including fines and imprisonment for providing false information.
To avoid these penalties, it is critical to file on time and ensure that all the information submitted is accurate and complete.
7. Consider Working with Professionals
The BOIR filing requirements are complex, and failure to comply could result in significant fines or penalties. Many businesses may find it beneficial to work with legal, financial, or compliance professionals who can help navigate the process. These experts can assist with identifying beneficial owners, ensuring compliance, and helping you meet the January 2025 deadline.
Conclusion
The BOIR first filing deadline may seem far off, but it’s crucial to begin preparing now. Understanding the requirements, identifying your beneficial owners, and gathering the necessary documentation will save you time and reduce the risk of penalties. Stay proactive, stay informed, and seek professional advice if needed to ensure your business complies with the new reporting regulations.
As the January 2025 deadline approaches, make sure that your business is on track for a smooth and timely filing process. Taking these steps now will help you avoid unnecessary stress and ensure that your company is in full compliance with the Corporate Transparency Act and the BOIR filing requirements.