Overview

The BOI Reporting Rule, implemented under the Corporate Transparency Act (CTA), mandates that certain corporations, limited liability companies (LLCs), and other similar entities report information about their beneficial owners to FinCEN. The aim is to enhance corporate transparency and curb illicit activities such as money laundering and fraud.

Who Must Report?

• Reporting Companies: Includes domestic entities (corporations, LLCs, and similar entities created by filing documents with a state or tribal authority) and foreign entities registered to do business in the U.S.

• Exemptions: Twenty-three types of entities are exempt which are listed below

There’s also an exemption for "large operating companies." These are defined as companies that 1) have more than 20 full-time employees in the U.S., 2) operate from a physical office in the U.S., and 3) filed a federal tax return for the previous year reporting gross receipts or sales exceeding $5 million. The term "has an operating presence at a physical office within the United States" means that the entity regularly conducts its business at a physical location in the U.S. that it owns or leases, and this location is physically distinct from the business premises of any unaffiliated entity.

Beneficial Owners and Company Applicants

• Beneficial Owners: Individuals who exercise substantial control over the entity or own/control at least 25% of the ownership interests.

• Company Applicants: The individuals responsible for filing the document that creates the entity or registers it to do business in the U.S.

A beneficial owner is an individual who, either directly or indirectly, 1) exercises significant control over the reporting company, or 2) owns or controls at least 25% of its ownership interests. However, there are five categories of individuals who do NOT qualify as beneficial owners:

1. A minor child (though the personal information of a parent or guardian must be reported)

2. A nominee, intermediary, custodian, or agent on behalf of another individual

3. An employee acting solely in their capacity as an employee

4. An individual whose only interest in the reporting company is a future interest through inheritance rights

5. A creditor of the reporting company.

An individual “exercising substantial control” includes 1) senior officers, 2) people who can appoint and remove senior officers, including the board of directors or similar body, and 3) anyone who directs, determines or has substantial influence over important decisions made by the company

Filling of Report

• Existing Companies: Entities created or registered before January 1, 2024, must file their initial reports by January 1, 2025.

• New Companies (2024): Entities created or registered in 2024 have 90 days to file their initial reports.

• New Companies (Post-2024): Entities created or registered on or after January 1, 2025, must file their initial reports within 30 days of creation or registration.

How to File

Filings can be submitted via the BOI E-Filing website, which launched on January 1, 2024. There is no fee for submitting BOI reports.

Let’s talk if you need any help in filing FinCEN BOI Report. Click the link below to schedule a meeting

https://calendly.com/advince/30min?back=1&month=2024-07