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Guide to Beneficial Ownership Information Reporting

Introduction

Beneficial Ownership Information Reporting begins January 1, 2024 and most companies in the United States will need to report information about the owner’s and leaders of the organization. These people are referred to as beneficial owners. This information must be reported to the Financial Crimes Enforcement Network (FinCEN). 

In this guide we will walk through what Beneficial Ownership Information Reporting is, who needs to report, and how to go about doing so. 

Who Needs to Report?

The Reporting Rule breaks reporting companies down into 2 categories:

  1. Domestic Reporting Company
  2. Foreign Reporting Company

So long as the company does not meet one of the 23 exceptions listed below they will be required to file a Beneficial Ownership Report with FinCEN.

Exemptions from Reporting

There are twenty-three specific types of entities that are exempt from reporting. These exemptions cover a range of entities, including certain financial institutions, public utilities, and entities that are already subject to specific types of federal regulation.

Below is the full list of specific exceptions from Beneficial Ownership Reporting Requirements:

  1. Securities Reporting Issuer
  2. Governmental Authority
  3. Bank
  4. Credit Union
  5. Depository Institution Holding Company
  6. Money Services Business
  7. Broker or Dealer in Securities
  8. Securities Exchange or Clearing Agency
  9. Other Exchange Act Registered Entity
  10. Investment Company or Investment Adviser
  11. Venture Capital Fund Adviser
  12. Insurance Company
  13. State-Licensed Insurance Producer
  14. Commodity Exchange Act Registered Entity
  15. Accounting Firm
  16. Public Utility
  17. Financial Market Utility
  18. Pooled Investment Vehicle
  19. Tax-Exempt Entity
  20. Entity Assisting a Tax-Exempt Entity
  21. Large Operating Company
  22. Subsidiary of Certain Exempt Entities
  23. Inactive Entity

Who is Considered a Beneficial Owner?

A beneficial owner is any individual who either directly or indirectly has either substantial control over a reporting company or owns at least 25% of the ownership interests of a reporting company. 

There are cases where there could be multiple beneficial owners and in those cases all beneficial owners will need to report. 

What is substantial control?

Substantial control can be reached if the individual meats any of the 4 following criteria. 

  1. Senior officer
  2. Has authority to appoint or remove certain officers or directors
  3. Important decision-maker
  4. Any other substantial control over the reporting company

Filing Timeline

Entities formed or registered before January 1, 2024, have until January 1, 2025, to file their initial reports.

Entities formed or registered between January 1, 2024, and January 1, 2025, have 90 calendar days after notice of their formation or registration to file.

Entities formed or registered on or after January 1, 2025, have 30 calendar days from notice of their formation or registration to file.

Penalties for Non-Compliance

Failure to report, or providing false or fraudulent information, can result in significant civil and criminal penalties. Civil penalties can amount to up to $500 for each day the violation continues, and criminal penalties can include imprisonment for up to two years and fines up to $10,000. Senior officers of an entity that fails to file a required BOI report may also be held accountable.

How to File

You have 2 overarching options for filing your Beneficial Ownership Information Report.

  1. You can do it yourself on the FinCEN website
  2. You can hire someone else to do it

For your convenience Midwest CPA is partnering with FileForms that you can utilize to file with FinCEN on your behalf. You can access their site here. We do get a referral should you utilize this link.

Alternatively, you could find a local attorney to help you with the filing. 

Have more Questions?

If you have more questions reach out to a professional at Midwest CPA.

While we’ve got you here, why not take a look at our other services.

Disclaimer

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting, or investment advice. You should consult a qualified legal or tax professional regarding your specific situation.

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