UPDATE: The requirement to file BOI reports is on hold – at least for now. From The National Law Review: “On December 3, 2024, the U.S. District Court for the Eastern District of Texas entered a preliminary injunction suspending enforcement of the Corporate Transparency Act (CTA) and its implementation of regulations nationwide.” In response, the Department of Justice issued a notice of appeal on December 5th.

What this means for you: If you have already submitted your BOI report(s), there’s nothing left to do. If you have not yet done so, you may choose to do so anyway or wait and see how the legal proceedings play out. As noted in the article linked above, “reporting obligations may change on short notice,” so make sure to monitor the news for updates. You can also come back to this post, which we will keep updated.

Original post:

Attention U.S. business owners: If you are a beneficial owner in a non-exempt company, you must submit a Beneficial Owner Information Report. Depending on when your company was established, you may have 30 or 90 days from when your company was created or until January 1, 2025, to do so.

The penalty for failing to file is steep – over $500 per day in fines and even jail time.

The new reporting requirement is due to the Corporate Transparency Act (CTA), which was passed in late 2020 after being tacked onto a larger bill (the National Defense Authorization Act for Fiscal Year 2021). Here’s what to know about the reporting requirement and what you should do.

Frequently Asked Questions

How Do I File a Beneficial Owner Information Report?

You can file a BOIR online at https://www.fincen.gov/boi.

What is a Beneficial Owner Information Report?

A Beneficial Owner Information Report (BOIR) is a required submission to the Financial Crimes Enforcement Network (FinCEN, part of the Treasury Department) that contains information on the company and its beneficial owner(s). This information includes full name, address, date of birth, and ID.

What is a “Beneficial Owner”?

A “beneficial owner” is someone who owns or controls at least 25% of the “ownership interests” of the company or someone who exercises “substantial control” over the company.

Who Must File a Beneficial Owner Information Report?

A BOIR must be filed for every “reporting company” which is established in the U.S. or registered to do business in the U.S. and is not exempt (see below for exemptions). This may be an LLC, a corporation, or any other business entity that was created by filing with the secretary of state, as well as some trusts.

Just one BOI report is required per company, regardless of the number of beneficial owners. The report is typically filled out and filed by one of the beneficial owners, such as a member, manager, director, or corporate officer, or an attorney working at or for the company.

Which Companies Are Exempt?

Some companies qualify for an exemption, meaning they are not required to file a BOI report.

These include companies that are already subject to regulatory oversight such as banks, credit unions, insurance companies, and tax-exempt entities. “Large operating companies” are also exempt; under the CTA, a “large operating company” is one with a physical office in the U.S., more than 20 full-time employees, and over $5 million in gross receipts or sales for the previous year as reported on a federal income tax or information return.

Find the full list of the 23 exempt entities on the FinCEN website.

When is the BOIR Due?

Companies formed or established before January 1, 2024 have until January 1, 2025 to submit a BOIR.

Companies that have ceased to exist but were still in existence as of January 1, 2024 have until January 1, 2025 to submit a BOIR.

Companies formed or established between January 1, 2024 and January 1, 2025 have 90 days to submit a BOIR.

Companies formed or established after January 1, 2025 have 30 days to submit a BOIR.

Is a BOIR Due Every Year?

No, as of now, just one BOIR is required. However, substantial changes must be reported within 30 days with a new BOIR, if, for example, the beneficial owners change or a previously non-exempt company becomes exempt (or vice versa).

What is a FinCEN Identifier?

A FinCEN ID is a unique 12-digit number an individual or entity may use when submitting a BOIR. It is not required. However, if you are submitting multiple BOIRs, a FinCEN ID can help speed up the process by allowing you to submit your personal information just one time rather than repeating it again and again.

What Are the Penalties for Non-Compliance?

According to FinCEN, someone who “willfully” violates the BOI reporting requirements may be fined for each day the violation continues. The amount of the fine adjusts annually with inflation, so what was originally a $500 per day fine was (as of 2024) $591 per day.

Willful violation can also lead to up to two years in prison and a $10,000 fine.

Uncertainty Over the Future of the CTA

The stated intention of the Corporate Transparency Act is to reduce money laundering, financing of terrorism, and other financial crimes. However, it has already been challenged in a number of lawsuits, as some see it as intrusive and unconstitutional. The future of the CTA is unclear, as these legal challenges could lead to significant changes in reporting requirements.

But that’s a long way off, if it happens at all. For now, you can stay in compliance and avoid steep financial penalties (and possible imprisonment) by submitting a BOIR for any company in which you’re a beneficial owner.

Protect Your Interests, Avoid Mistakes, and Grow Your Business with Gem McDowell

For legal help and strategic advice on business in South Carolina, contact Gem of the Gem McDowell Law Group. Whether you want to establish, buy, sell, or grow your business, Gem and his team can help. Call the Myrtle Beach or Mt. Pleasant, SC office today at 843-284-1021.