Countdown to BOIR First Filing Deadline: What You Should Do

As the deadline for the first filing of the Beneficial Ownership Information Report (BOIR) approaches, it’s crucial for businesses across the United States to understand the implications of this new requirement and take appropriate action. The BOIR, enacted as part of the Corporate Transparency Act (CTA), mandates companies to disclose key information about their beneficial owners—individuals who ultimately own or control the company. This article will guide you through the steps you need to take to comply with the BOIR filing requirement and avoid penalties, ensuring a smooth transition into this new regulatory landscape.

What is BOIR and Why is it Important?

The Beneficial Ownership Information Report (BOIR) is a new disclosure requirement for businesses that was introduced under the Corporate Transparency Act (CTA), which became law in 2021. The CTA aims to combat money laundering, tax evasion, and other financial crimes by providing transparency about the ownership structures of companies.

Under the CTA, many businesses will be required to submit a detailed report to the Financial Crimes Enforcement Network (FinCEN), which is part of the U.S. Department of the Treasury. This report will include information about individuals who directly or indirectly control or own a substantial stake in the company—often referred to as the “beneficial owners.” This information will be stored in a central database, accessible to law enforcement agencies, financial institutions, and other authorities, but not the general public.

Who Needs to File the BOIR?

Not all businesses are required to submit the BOIR, but a wide range of entities will need to comply with the new regulations. These include:

1. Corporations and LLCs: Most corporations and limited liability companies (LLCs) that are formed or registered to do business in the U.S.
2. Partnerships and Similar Entities: Certain types of partnerships and other similar business structures.
3. Foreign Entities Doing Business in the U.S.: Foreign entities with a registered presence or operations in the U.S. will also be required to file if they meet the specified criteria.

However, there are some exemptions. For example, large operating companies, regulated entities (like banks and insurance companies), and inactive entities may be exempt from filing. To determine whether your company is required to file, consult with a legal professional familiar with the nuances of the CTA.

What Information Will You Need to Provide?

To file your BOIR, you will need to submit specific details about your business and its beneficial owners. The required information includes:

• Basic Company Information: This includes the company’s legal name, business address, and its formation details.
• Beneficial Owners’ Personal Information: This includes the name, date of birth, residential address, and unique identification number (such as a passport or driver’s license number) for each beneficial owner.
• Ownership and Control Information: You must report the percentage of ownership or voting control held by each beneficial owner, as well as details on how they exert control over the business.

Beneficial owners are generally defined as individuals who directly or indirectly own 25% or more of the company’s equity or voting rights, or those who otherwise exercise significant control over the entity.

Key Deadlines for the First Filing

The first deadline for submitting the BOIR is fast approaching. Companies are required to file by January 1, 2025, but there are several key dates leading up to this:

• Effective Date: The regulations governing the BOIR were finalized in September 2023, setting the stage for businesses to begin filing. This is when companies should start preparing to collect the required information.
• Transition Period: If your business was formed before the final rule took effect, you will need to file your first report by January 1, 2025. If your business was formed after the final rule, your BOIR is due within 30 days of formation or registration.
• Ongoing Updates: After the initial filing, companies will be required to update the report annually or whenever there are changes to the beneficial ownership information.

Steps to Take Before the BOIR Filing Deadline

To ensure that your company meets the BOIR filing deadline, follow these essential steps:

1. Review Ownership Structures

Begin by thoroughly reviewing the ownership structure of your company. Identify all individuals who meet the criteria for being a “beneficial owner.” This may require looking beyond the obvious shareholders and directors to include individuals who might exercise significant control over the business. This step is crucial because incorrect or incomplete reporting can lead to penalties.

2. Gather Required Information

Once you’ve identified your beneficial owners, collect the required information about each individual. This includes:

• Full name
• Date of birth
• Residential address
• Identification number (e.g., passport, driver’s license)
• Percentage of ownership or control

Be prepared to keep this information updated, as any changes will need to be filed within a specified period.

3. Consult Legal and Compliance Advisors

Given the complexity of the BOIR requirements, it’s advisable to consult with legal and compliance experts. They can help ensure that you understand the regulations, assist with any required documentation, and verify that your filing meets all legal requirements.

4. Register with FinCEN

To submit your report, your business will need to register with FinCEN’s secure online portal. This registration process may take some time, so it’s a good idea to complete it ahead of the filing deadline to avoid last-minute issues.

5. Submit Your Filing

Once your registration is complete and the necessary information is gathered, you can submit your BOIR electronically through FinCEN’s portal. Be sure to double-check all the details before submitting to avoid errors that could delay the process.

Penalties for Non-Compliance

Failure to comply with the BOIR filing requirements can result in severe consequences. Penalties include:

• Civil Penalties: Companies that fail to file or submit inaccurate information can be fined up to $500 per day for each day the violation continues.
• Criminal Penalties: Willfully providing false or misleading information, or failing to file a report, can lead to criminal penalties, including fines and imprisonment.

These penalties underscore the importance of complying with the BOIR requirements and ensuring accurate, timely filings.

What to Do After the Initial Filing

Once you’ve successfully filed your initial BOIR, it’s essential to stay on top of any changes in your company’s ownership or control. Whenever there are modifications to the beneficial ownership structure, such as a new owner or changes in control, you must update the report within 30 days.

Additionally, be prepared for periodic re-filing if required by your specific business structure or industry regulations.

Conclusion

The countdown to the BOIR first filing deadline is officially underway, and businesses must take proactive steps to ensure they comply with this new requirement. By reviewing your ownership structure, gathering the necessary information, and submitting your report on time, you can avoid penalties and contribute to greater transparency in the U.S. business landscape.

The January 1, 2025 deadline may seem distant, but with proper planning, your company can meet the BOIR filing requirements without stress. Start the process now, and stay ahead of the deadline. If you need help, consider seeking guidance from legal professionals or compliance specialists to ensure that your filing is accurate and timely.

By taking the right steps today, you’ll avoid potential fines and safeguard your company’s reputation. Don’t wait until the last minute—act now to stay compliant and ensure a smooth transition into this new regulatory environment.