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Beneficial Ownership Information and the Corporate Transparency Act

SERVICES

Businesses small and large are required to file a new type of report with the U.S. federal government in 2024. Called the Beneficial Ownership Information report (or BOI for short), this report discloses the owners of a business.

Here’s what you need to know about this new report:

Most businesses will need to file the Beneficial Ownership Information report with the Financial Crimes Enforcement Network (FinCEN) between January 1, 2024 and January 1, 2025.
Businesses could face civil penalties of $500 per day if the BOI report is filed late, and criminal penalties of up to $10,000 for willfully failing to file.
Business owners need to remain vigilant for any changes due to time constraints. BOI reports must be updated within 30 days of any change. Businesses will be required to file an updated BOI report if any information changes – such as a change of address, or adding or removing owners.


Start reducing your chance of penalties by acting now to understand the requirements and collect the information you’ll need for your business’s beneficial ownership reporting.

What is BOI?
The Beneficial Ownership Information report is all about disclosing the owners of a business entity to the federal government.
This report is filed with the Financial Crimes Enforcement Network (FinCEN), which is a division of the U.S. Treasury Department.

BOI reports for businesses.
The general rule is, if you filed documents with the secretary of state when establishing your business, you may need to file the Beneficial Ownership Information Report.

There are some exceptions the filing requirements for BOI. However, these will not apply to most business and need to be carefully reviewed to ensure if they are appropriate for a particular entity.

Initial BOI report filing.
Initial BOI report due dates depend on the date of the entity formation with the state.

  • Business entities formed or incorporated before January 1, 2024, must file an initial BOI report between January 1, 2024, and January 1, 2025. Then updates are filed within 30 days after any change.
  • Business entities formed or incorporated on or after January 1, 2024, must file the initial BOI within 90 days of receiving notice that their business entity was created or registered at the state level. Then updates are filed within 30 days after any change.
  • Business entities that form or incorporate on or after January 1, 2025 must file an initial BOI report within 30 days after receiving notice that their business entity was created or registered at the state level. Then they must also file an updated BOI report within 30 days after any change occurs.


BOI information requirements.
On the BOI report, you will need to disclose the beneficial owners of the entity.

Beneficial owners, are those whom own or control at least 25% of the interests of a business entity. This includes individuals who exercise substantial control over a business (even if they don’t own 25% or more of the business).

This means that the following people may need to be disclosed on a BOI report:

  • Shareholders of a corporation, if they own 25% or more
  • Partners in a partnership, if they own 25% or more
  • Members in a limited liability company (LLC), if they own 25% or more
  • Key employees who exert substantial control over a business entity, even if they don’t own 25% or more.
  • Sole proprietors with an LLC for their business


Potential penalties for late BOI reports.
Penalties for late or unfiled BOI reports can be both criminal and civil.
The maximum criminal penalty is $10,000 for willfully failing to file the Beneficial Ownership Information report. You could also face up to two years imprisonment.
Civil penalties start at $500 per day if the initial BOI report or an updated report is filed late.

What can you do to avoid these penalties? Adopt a risk management mindset! Eliminate the risk of late penalties by taking steps now to ensure that your BOI report is filed in time.

Information is included on the BOI report.
>For the business entity itself:

  • Full name of the entity
  • Employer Identification Number
  • The state or jurisdiction where the entity was incorporated or formed
  • Full street address 


>For each beneficial owner:

  • Full legal name
  • Full residential street address
  • Date of birth
  • Picture of government-issued identification (such as a passport or driver’s license)


In addition, there are special disclosure rules for entities that are newly created in 2024 or thereafter. These entities will need to disclose the individual(s) who filed the incorporation paperwork with the secretary of state.

Information on the BOI update report.
If any information on the original report changes or is incorrect, you have 30 days to file an update before the penalties start.  That is 30 days from the date of the change. So, depending on the entity, these BOI updates may be a rare occurrence or something that happens multiple times in the same year.

Some things which may necessitate a BOI report may include:

  • Your business changes its name or address.
  • Your business entity registers a new fictitious business name – also known as Doing Business As (DBA).
  • Any shareholder or partner or member acquires new shares and now meets or exceeds 25% ownership.
  • Any shareholder, partner or member retires or dies.
  • Any shareholder, partner or member changes their name (i.e. marriage or divorce).
  • Any shareholder, partner or member changes their residential address.
  • Any shareholder, partner or member obtains a new driver’s license, passport, tribal ID or identification document used in previous BOI report.


Completing the BOI filing requirements.

Businesses may complete the initial and updated BOI reports themselves. Information for doing so is available on the US Treasury’s Financial Crimes Enforcement Network (FinCEN) website.If you want a more proactive plan of managing this reporting requirement, speak with our tax professionals at Murphy Tax Associates LLC to see how we can help design a plan to manage this business obligation.