But many affected businesses don\u2019t understand the seriousness of this requirement or even know about its ins and outs \u2013\u00a0<\/strong>and the rules continue to change.<\/p>\n Fortunately, there are\u00a0resources<\/a>\u00a0and experts\u00a0<\/strong>available to help\u00a0business owners<\/a>\u00a0\u2013 as well as\u00a0legal<\/a>\u00a0and\u00a0accounting<\/a>\u00a0professionals\u00a0\u2013 understand\u00a0what they need to do right now.<\/p>\n The actual report is called the Beneficial Ownership Information (BOI) report \u2013 part of the\u00a0Corporate Transparency Act<\/a>\u00a0that Congress passed in 2021 and which establishes uniform reporting requirements for businesses. The BOI lays out in personal detail who owns a business; read: this report will contain personal identifying information about a company\u2019s beneficial owners. The Corporate Transparency Act and Beneficial Ownership Reporting is part of the U.S. government\u2019s efforts to crack down on money laundering, financing of terrorism, tax fraud, and other illegal acts. In fact, the Corporate Transparency Act is part of the federal\u00a0Anti-Money Laundering Act of 2020<\/a>\u00a0(AML Act).<\/p>\n \u201cAccording to Congress, bad actors \u2013 people who are engaged in money laundering and other illicit activities \u2013 don\u2019t do it in their own name. They do it through LLCs, corporations, and other similar entities. Right now, when these types of companies are created in the U.S. \u2013 or when they\u2019re created in foreign countries and register to do business in the U.S. \u2013 they aren\u2019t required to provide the names of the individuals who ultimately own or control the entity. And that means law enforcement has trouble finding out who the individuals are behind these entities. That\u2019s why Congress says that the BOI will help protect national interests,\u201d says\u00a0Sandra Feldman<\/a>, Publications Attorney at Wolters Kluwer CT Corporation.<\/p>\n Business owners file the BOI with FinCEN \u2013 the U.S. Department of Treasury\u2019s Financial Crimes Enforcement Network, which issues the regulation providing the details on who must file a report, when it has to be filed, and what information has to be reported. The CTA is the most impactful piece of federal legislation affecting businesses since the U.S. Securities Laws from the 1930s. And while this type of report is new to the United States, it\u2019s already quite common in many other developed countries.<\/p>\n The requirement is pretty far-reaching, and it\u2019s not always clear which entity must file. \u201cThe first step for small business owners is to figure out if their company is affected. There are\u00a0tools available<\/a>\u00a0to help figure out this part, where you can answer a few questions, and in the end, it will give you a general indication of whether or not you have to file,\u201d says Feldman.<\/p>\n Based on the current rule, two types of reporting companies have to file a BOI \u2013 unless they qualify for an exemption: 1) a domestic reporting company, and 2) a foreign reporting company.<\/p>\n There are\u00a023 categories of entities that are exempt<\/a>. Most are for entities that are already subject to close federal or state regulation and thus already have to disclose their beneficial ownership information to the government. For example:<\/p>\n There\u2019s also an exemption for so-called \u201clarge operating companies.\u201d\u202f Those are companies that 1) employ more than 20 full-time employees in the U.S., 2) operate at a physical office in the U.S., and 3) have filed a federal tax return for the previous year reporting gross receipts or sales of more than $5 million. The term \u201chas an operating presence at a physical office within the United States\u201d means an entity regularly conducts its business at a physical location in the U.S. that the entity owns or leases and that is physically distinct from the place of business of any other unaffiliated entity.\u00a0\u201cAgain, most small corporations and LLCs probably do not qualify for an exemption,<\/strong>\u00a0but you should still be familiar with them to know for sure if your company is exempt or not,\u201d says\u00a0Duynstee<\/a>.<\/p>\n First, those required to file a report must determine who their beneficial owners are. Then, they have to report the information about the company and the personal information about their beneficial owners. Plus, companies created or first registered on or after January 1, 2024, also have to report the personal information for their company applicants.<\/p>\n A beneficial owner is an individual who, directly or indirectly, either\u00a01) exercises substantial control over the reporting company, or 2) owns or controls at least 25 percent of its ownership interests.<\/strong>\u00a0On the other end, there are five types of individuals who do NOT count as beneficial owners:<\/p>\n An\u00a0individual \u201cexercising substantial control\u201d<\/strong>\u00a0includes 1)\u00a0<\/strong>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\u00a0<\/strong>influence over important decisions made by the company.<\/p>\n \u201cSimply put, a company applicant is the individual who\u00a0files an application<\/strong>\u00a0to form a corporation, LLC, or other entity formed by filing a document with a state, or who registers or files an application to register a non-U.S. entity in the U.S. And if more than one individual is involved in the filing of the document, the company applicant is the person who is primarily responsible for directing or controlling the filing,\u201d says Feldman.<\/p>\n For the company section,<\/strong>\u00a0you have to include the reporting company\u2019s 1) full legal name, 2) any trade or \u201cdoing business as\u201d names, 3) complete current street address of the principal U.S. place of business, 4) the state, tribal or foreign jurisdiction of formation, and 5) the IRS Taxpayer Identification Number (TIN).\u00a0For a foreign reporting company, 4) is the state or tribal jurisdiction where the company first registers, and 5) will be a tax identification number issued by a foreign jurisdiction and the name of that jurisdiction.<\/p>\n For beneficial owners or company applicants<\/strong>, applicable businesses must report their 1) full legal name, 2) date of birth, 3) current residential street address (except for company applicants acting as such in the course of their business, who must give their business address), 4) an identifying number from an acceptable document. Acceptable documents include a current U.S. passport, driver\u2019s license or other state or local ID, Indian tribe ID or \u2013 if the individual has none of those \u2013 a foreign passport, and an image of the document from which the unique identifying number was obtained. Alternatively, an individual can also\u00a0request and use a FinCEN unique identifying number<\/a>.<\/p>\n \u201cNow, let\u2019s say that an exempt entity has or will have a direct or indirect interest in a reporting company, and an individual is a beneficial owner of the reporting company exclusively by virtue of the individual\u2019s ownership interest in the exempt entity. In that case, the reporting company only needs to name the exempt entity and doesn\u2019t need to report the other information in respect of the business owner,\u201d says Feldman.<\/a><\/p>\n The information collected will be kept in a private database maintained by FinCEN, and it will not be accessible to the public. In fact, FinCEN is required to implement protocols to safeguard beneficial ownership information, build a secure system to store the information and establish procedures to ensure that only authorized users can access the information and only for authorized purposes.<\/p>\n However, FinCEN is authorized to disclose BOI to a limited group of requestors. These include:<\/p>\n If or when the reporting company ends, the information will stay on file for at least five years after that.<\/p>\n There\u2019s an option to make things easier for those who have to file for several companies.\u00a0This isn\u2019t required, but beneficial owners, company applicants, and reporting companies can apply to FinCEN for a unique number called a FinCEN Identifier.\u202f\u00a0<\/b>That\u2019s a unique number that\u2019s issued for that individual or company.<\/p>\n \u201cThe way it works is that the FinCEN Identifier application asks for all the personal information that would have to be reported in the Beneficial Ownership Information report. Now, the\u00a0individual can simply provide their FinCEN Identifier to each reporting company<\/b>\u00a0in which they\u2019re a beneficial owner, rather than giving each company their personal information and ID. The reporting company can then include the FinCEN Identifier on their BOI report.\u202fOf course, if any information in the FinCEN Identifier application changes, the applicant still has to file an update or correction within 30 days,\u201d says Spencer.<\/p>\n A reporting company can also obtain a FinCEN Identifier by submitting to FinCEN an application at or after the time that the entity submits an initial report. Each individual or company can only get one FinCEN Identifier. Applications for a FinCEN Identifier can be submitted via the filing system on FinCEN\u2019s website.<\/p>\n This is a federal filing. There is no state filing involved<\/strong>. Your company\u2019s BOI report has to be\u00a0submitted electronically<\/strong>\u00a0through a filing system on FinCEN\u2019s website. That\u2019s also where all updates and corrections will be filed. A reporting company can also get a FinCEN Identifier, and that number can then be reported, based on the guidelines.<\/p>\n In short: As soon as possible.<\/p>\n Any domestic reporting company or foreign reporting company\u00a0created or registered before January 1, 2024<\/strong>, must file a report by January 1, 2025.<\/p>\n Any domestic reporting company or foreign reporting company\u00a0created or first registered in 2024<\/strong>\u00a0must file the initial BOI report within 90 calendar days of the date on which it receives actual or public notice that its creation has become effective.<\/p>\n The CTA only requires an initial BOI report, an updated report (when necessary), and a corrected report (when necessary). You will have to keep track of all the information you reported and file updates when it changes.<\/p>\n \u201cThere\u2019s a good chance you might have to file an update: FinCEN estimates that about 6.6 million businesses will file updates to their reports in 2024 alone. And every year after that, 14.5 million updates will likely be filed. That\u2019s not even taking into account yet the updates that perhaps millions of individuals who have obtained FinCEN Identifiers will have to file when their personally identifiable information changes , as they will have to file an updated application with FinCEN,\u201d says Feldman.<\/p>\n \u201cHere\u2019s something important to remember now to save yourself headaches down the line, because it\u2019s not even just about the first filing: keep track of the information you\u2019re reporting. That way, if anything changes, you can file timely updates when necessary,\u201d says George May,\u00a0Vice President, Small Business Segment with Wolters Kluwer.<\/p>\n \u00a0<\/p>\n There are\u00a0several scenarios<\/strong>\u00a0where change will \u2013 or will not \u2013 require filing an update to the BOI report:<\/p>\n It is unlawful for any person to willfully fail to report complete or updated beneficial ownership information to FinCEN or willfully provide false or fraudulent information.\u00a0<\/strong>Violators are subject to a civil penalty of up to $500 for each day the violation continues, and criminal fines of up to $10,000, imprisonment for up to two years, or both. The CTA also imposes penalties for the unauthorized disclosure of information. If a report was inaccurate when filed, the reporting company has to file a corrected report within 30 calendar days\u00a0<\/strong>after becoming aware of the inaccuracy or has reason to know of the inaccuracy.<\/p>\n FinCEN states that while an individual may file a report on behalf of a reporting company, the reporting company is ultimately responsible for the filing. The same is true of the certification. The reporting company will be required to make the certification, and any individual who files the report as an agent of the reporting company will certify on the reporting company\u2019s behalf.<\/p>\n The CTA impacts\u00a0tens of thousands of accounting firms. In fact, it\u2019s important for accountants to understand the reporting requirement: they might easily assume\u00a0they are exempt<\/a>, but that\u2019s not entirely so. There are\u00a0two scenarios<\/strong>\u00a0accounting professionals need to consider to ensure compliance with the BOI reporting requirement \u2013 for themselves and their clients.<\/p>\n Most of the\u00a0entities and individuals that are subject to the CTA requirements\u00a0are clients of accounting firms \u2013 and they look to their\u00a0certified public accountants (CPAs) as trusted advisors regarding the CTA and FinCen\u2019s BOI reporting rule<\/a>. \u201cAccounting firms already handle tax returns and other compliance reporting for their clients, which means they have the most\u00a0detailed information regarding the entities and their ownership<\/a>. So it\u2019s a logical step for clients to rely on their CPAs to handle the BOI reporting,\u201d says\u00a0Mark Friedlich<\/a>, VP of U.S. Government Affairs with Wolters Kluwer Tax & Accounting North America.<\/p>\n So how can accounting firms help protect their clients\u2019 interests? They should take several steps:<\/p>\n At first glance, it might look like all public accounting firms are statutorily exempt from being a reporting company. But the exemption actually only applies to\u00a01,700 accounting firms<\/a>\u00a0(both U.S. and non-U.S. firms) registered with the Public Company Accounting Oversight Board (PCAOB), as required by the Sarbanes-Oxley Act of 2022. Also, accounting firms with more than $5M in gross receipts and 21 or more full-time employees (FTEs) are exempt, and the great majority of firms fall well below these thresholds. Considering that there are currently more than 46,000 public accounting firms in the U.S.\u00a0(according to the AICPA)<\/a>, that means\u00a0tens of thousands of firms do need to submit a BOI report<\/a>.<\/p>\n \u201cThe rationale is that firms that provide assurance and audit services are obligated to report similar data as that required by the CTA. That\u2019s why these firms are exempt. But all other accounting firms still need to comply with the reporting requirement,\u201d says Friedlich.<\/p>\n Compliance with the federal Corporate Transparency Act (CTA) is mandatory. The BOI reporting requirement affects tens of millions of (small) business owners, as well as legal and accounting professionals. If they don\u2019t comply, they risk harsh civil and criminal penalties, including hefty fines (up to $591\/day) and possible time behind bars.<\/p>\n Excerpts from an article by Wolters Kluwer\u00a0<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Understand beneficial ownership information reporting requirements under the Corporate Transparency…<\/p>\n","protected":false},"author":1,"featured_media":3560,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-3069","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-boi-2024-reporting"],"rttpg_featured_image_url":{"full":["https:\/\/aelitedigital.com\/Wp-Heroic-Solutions\/wp-content\/uploads\/2024\/03\/BOILogo3.png",765,433,false],"landscape":["https:\/\/aelitedigital.com\/Wp-Heroic-Solutions\/wp-content\/uploads\/2024\/03\/BOILogo3.png",765,433,false],"portraits":["https:\/\/aelitedigital.com\/Wp-Heroic-Solutions\/wp-content\/uploads\/2024\/03\/BOILogo3.png",765,433,false],"thumbnail":["https:\/\/aelitedigital.com\/Wp-Heroic-Solutions\/wp-content\/uploads\/2024\/03\/BOILogo3-150x150.png",150,150,true],"medium":["https:\/\/aelitedigital.com\/Wp-Heroic-Solutions\/wp-content\/uploads\/2024\/03\/BOILogo3-300x170.png",300,170,true],"large":["https:\/\/aelitedigital.com\/Wp-Heroic-Solutions\/wp-content\/uploads\/2024\/03\/BOILogo3.png",765,433,false],"1536x1536":["https:\/\/aelitedigital.com\/Wp-Heroic-Solutions\/wp-content\/uploads\/2024\/03\/BOILogo3.png",765,433,false],"2048x2048":["https:\/\/aelitedigital.com\/Wp-Heroic-Solutions\/wp-content\/uploads\/2024\/03\/BOILogo3.png",765,433,false],"etheme-woocommerce-nimi":["https:\/\/aelitedigital.com\/Wp-Heroic-Solutions\/wp-content\/uploads\/2024\/03\/BOILogo3-1x1.png",1,1,true],"etheme-nimi":["https:\/\/aelitedigital.com\/Wp-Heroic-Solutions\/wp-content\/uploads\/2024\/03\/BOILogo3-10x6.png",10,6,true]},"rttpg_author":{"display_name":"admin","author_link":"https:\/\/aelitedigital.com\/Wp-Heroic-Solutions\/author\/admin\/"},"rttpg_comment":0,"rttpg_category":"Boi 2024 reporting<\/a>","rttpg_excerpt":"Understand beneficial ownership information reporting requirements under the Corporate Transparency...","_links":{"self":[{"href":"https:\/\/aelitedigital.com\/Wp-Heroic-Solutions\/wp-json\/wp\/v2\/posts\/3069","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/aelitedigital.com\/Wp-Heroic-Solutions\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/aelitedigital.com\/Wp-Heroic-Solutions\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/aelitedigital.com\/Wp-Heroic-Solutions\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/aelitedigital.com\/Wp-Heroic-Solutions\/wp-json\/wp\/v2\/comments?post=3069"}],"version-history":[{"count":1,"href":"https:\/\/aelitedigital.com\/Wp-Heroic-Solutions\/wp-json\/wp\/v2\/posts\/3069\/revisions"}],"predecessor-version":[{"id":3161,"href":"https:\/\/aelitedigital.com\/Wp-Heroic-Solutions\/wp-json\/wp\/v2\/posts\/3069\/revisions\/3161"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/aelitedigital.com\/Wp-Heroic-Solutions\/wp-json\/wp\/v2\/media\/3560"}],"wp:attachment":[{"href":"https:\/\/aelitedigital.com\/Wp-Heroic-Solutions\/wp-json\/wp\/v2\/media?parent=3069"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/aelitedigital.com\/Wp-Heroic-Solutions\/wp-json\/wp\/v2\/categories?post=3069"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/aelitedigital.com\/Wp-Heroic-Solutions\/wp-json\/wp\/v2\/tags?post=3069"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}1. What is the Beneficial Ownership Information report & the Corporate Transparency Act?<\/h3>\n
2. Does every US business have to file a Beneficial Ownership Information report?<\/h3>\n
3. Who is exempt from the Corporate Transparency Act?<\/h3>\n
![\"There](\"https:\/\/assets.contenthub.wolterskluwer.com\/api\/public\/content\/6b874e67f9ef45b280820b412c5dcaa5.svg?v=9373229c\")
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4. What information is required for the BOI report?<\/h3>\n
5. What is a Beneficial Owner & what does Beneficial Ownership mean?<\/h3>\n
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6. What is considered \u201csubstantial control\u201d over a reporting company?<\/h3>\n
7. Who is a \u201ccompany applicant\u201d?<\/h3>\n
8. What level of personal detail needs to be included?<\/h3>\n
9. What will FinCEN do with my information? Who will have access to it?<\/h3>\n
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10. Are there ways to make BOI reporting easier?<\/h3>\n
11. What else should I know about the Beneficial Ownership Information filing process and how to file a beneficial ownership report?<\/h3>\n
12. When do I have to submit my Beneficial Ownership Information report?<\/h3>\n
13. Will I have to file the BOI report every year now?<\/h3>\n
14. What happens in case of changes?<\/h3>\n
![\"FinCEN](\"https:\/\/assets.contenthub.wolterskluwer.com\/api\/public\/content\/2135491-fincen-estimates-that-about-6-6-million-businesses-will-file-updates-to-their-reports-in-2024-alone-and-every-year-after-that-14-5-million-updates-will-likely-be-filed--15812448ec.svg?v=09db9793\")
<\/section>\n<\/section>\n\n
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15. What happens in case of a mistake in my BOI report?<\/h3>\n
16. What if I need help with the filing?<\/h3>\n
How does the BOI reporting requirement impact the accounting industry?<\/h3>\n
Scenario 1:<\/strong>\u00a0Accounting firms might need to advise their reporting company clients on how to comply with the Corporate Transparency Act\u2019s BOI reporting requirement.<\/h3>\n
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Scenario 2:<\/strong>\u00a0An accounting firm could be a reporting company and have to file on its own behalf.<\/h3>\n
Bottom Line<\/strong><\/h2>\n