How to Successfully Meet the BOIR First Filing Deadline?
The clock is ticking, and businesses across the United States are preparing for one of the most significant compliance challenges in recent years. The Beneficial Ownership Information Report (BOIR), a mandate under the Corporate Transparency Act (CTA), is a new regulatory requirement designed to increase transparency in business ownership and combat illegal activities such as money laundering, tax evasion, and fraud.
As the BOIR first filing deadline approaches, it’s crucial for businesses, both large and small, to understand their responsibilities and take steps to ensure they meet the deadline. Failure to do so can result in penalties, including significant fines and legal consequences.
In this article, we’ll walk you through the steps you need to take to successfully meet the BOIR first filing deadline and stay compliant with federal regulations.
What is the Beneficial Ownership Information Report (BOIR)?
The Beneficial Ownership Information Report (BOIR) is part of the Corporate Transparency Act, which was signed into law in January 2021. Its primary purpose is to create a centralized registry of beneficial owners—individuals who own or control a company in the United States.
The BOIR aims to enhance corporate transparency by requiring certain companies to disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). By identifying individuals who ultimately control or profit from a business, the government hopes to make it more difficult for bad actors to use anonymous shell companies for illicit activities.
Under this law, most U.S. companies—including corporations, limited liability companies (LLCs), and similar entities—must file their beneficial ownership information with FinCEN by the first filing deadline. The report will contain crucial details about the company’s owners, such as their full legal names, birthdates, addresses, and unique identification numbers (such as a driver’s license number or passport number).
Who Needs to File the BOIR?
It’s important to note that not all businesses need to file the Beneficial Ownership Information Report (BOIR). While the CTA applies to most U.S. companies, certain exemptions exist. Businesses required to file include:
- Corporations, LLCs, and Similar Entities: Any U.S.-based company formed after January 1, 2024, or before this date (that doesn’t qualify for an exemption), must comply with the BOIR filing requirement.
- Exemptions: The following entities are exempt from filing the BOIR:
- Large operating companies (those with over 20 full-time employees, more than $5 million in revenue, and a physical office within the U.S.)
- Regulated entities, such as banks, credit unions, and investment companies.
- Inactive companies that have no business activity and no assets for a period of at least 12 months.
BOIR First Filing Deadline: What You Need to Know
The first filing deadline for the Beneficial Ownership Information Report (BOIR) is set for January 1, 2025. This means that businesses formed or registered before this date must file their initial report by January 1, 2025.
Subsequent updates to the report are required whenever there are changes in the business’s beneficial ownership. Any changes should be reported within 30 days of the change. For instance, if a new beneficial owner is added, or an existing owner sells their shares or otherwise loses control, an update must be filed.
Steps to Successfully Meet the BOIR First Filing Deadline
The first filing deadline for the Beneficial Ownership Information Report is fast approaching. Here are the key steps your business must take to comply with the BOIR requirements and avoid penalties.
1. Identify Your Beneficial Owners
The first and most important step is identifying the beneficial owners of your business. A beneficial owner is defined as an individual who either directly or indirectly owns or controls 25% or more of the company or has significant control over its operations.
For some companies, identifying beneficial owners can be straightforward—perhaps just one or two individuals hold the majority of the company’s shares. However, for other businesses with complex ownership structures, this process can be more difficult. If your business has multiple layers of ownership or complex control structures, you may need to engage with legal or compliance experts to help you determine who qualifies as a beneficial owner.
2. Collect the Required Information
Once you’ve identified the beneficial owners, you’ll need to gather the following information for each individual:
- Full legal name
- Date of birth
- Current residential or business address
- Unique identification number (such as a passport, driver’s license, or other government-issued ID)
Ensure that all the information you collect is accurate and up-to-date. Mistakes or omissions can result in penalties or delays in processing your report.
3. Understand the Exemptions and Determine Your Filing Requirements
Not all businesses are required to file the Beneficial Ownership Information Report. If your company is a large operating company with over 20 employees, more than $5 million in revenue, and a physical office within the U.S., you may be exempt from the filing requirement.
Likewise, regulated entities such as banks, insurance companies, and certain investment firms are also exempt. If you believe your business might be exempt, it’s important to carefully review the criteria and confirm whether you need to file.
4. Register with FinCEN
Before you can submit the Beneficial Ownership Information Report, your business must first register with the Financial Crimes Enforcement Network (FinCEN). This registration process will allow you to access the appropriate forms and portal to file your report.
Visit the FinCEN website to learn more about the registration process and ensure your business is ready to file on time. Keep in mind that registration with FinCEN may require you to create an account and submit specific company details, such as your Employer Identification Number (EIN) or Taxpayer Identification Number (TIN).
5. Submit the Report Before the Deadline
Once you’ve gathered all the necessary information and completed your registration with FinCEN, you’ll be ready to file your Beneficial Ownership Information Report. The filing will be completed online through the FinCEN portal. Make sure that all the information provided is accurate and complete before submitting the report.
Remember: The filing deadline is January 1, 2025—make sure you file on time to avoid penalties. Failure to file by the deadline can result in fines of up to $500 per day, and deliberate falsification of the information could result in criminal charges.
6. Maintain Accurate Records and Update When Necessary
After submitting the BOIR, it’s important to maintain accurate and up-to-date records about your business’s beneficial owners. If any changes occur—whether someone sells their shares, transfers control, or a new beneficial owner is added—you must update your filing within 30 days of the change.
Keep track of your business’s ownership structure and maintain a system for recording any changes so that you can quickly and efficiently update your report as necessary.
Why is It Crucial to Comply with the BOIR?
The Corporate Transparency Act (CTA) and its associated Beneficial Ownership Information Report are designed to increase transparency in business ownership and to make it harder for bad actors to hide behind anonymous companies. The BOIR aims to help law enforcement, regulators, and financial institutions better track ownership structures and prevent illicit activities such as money laundering, terrorist financing, and tax evasion.
By filing the BOIR on time, your business will:
- Comply with U.S. law, avoiding penalties or criminal charges
- Enhance your business’s credibility by demonstrating transparency to investors, regulators, and the public
- Contribute to the fight against financial crimes and support efforts to keep the U.S. financial system secure
Penalties for Non-Compliance
Failing to meet the BOIR first filing deadline or submitting inaccurate information can lead to severe penalties. These may include:
- Fines of up to $500 per day for non-compliance
- Criminal penalties for knowingly providing false or fraudulent information, which can result in fines up to $10,000 and possible imprisonment.
Conclusion:
As the January 1, 2025 deadline looms, it’s essential for businesses to start preparing for the Beneficial Ownership Information Report (BOIR) filing. By identifying your beneficial owners, gathering the required information, registering with FinCEN, and submitting your report on time, you can avoid penalties and comply with this important new regulation.
The process may seem complex, but with careful planning and attention to detail, you can navigate the filing requirements with confidence. If you have any questions or need assistance with the filing process, BOIR.org is here to help. Our team of experts can guide you through every step to ensure your business meets the BOIR first filing deadline successfully.
For more information and to get started, visit BOIR.org today.