Business owners in the United States are facing a new mandatory reporting requirement that has left many shocked. Starting in 2024, all businesses are required to submit a Beneficial Ownership Information Report (BOI) to the US Department of the Treasury. While existing businesses have until the end of the year to file, new businesses starting in 2024 only have a few days to comply.
The penalty for not filing this report is steep, with fines accruing up to $500 per day. The Corporate Transparency Act, signed into law in 2021, aims to make it harder for bad actors to hide their ill-gotten gains through opaque ownership structures.
But who exactly is required to file a BOI report? Domestic reporting companies and foreign reporting companies must declare their beneficial ownership information. Exemptions exist for certain types of businesses, such as securities reporting issuers, governmental authorities, and financial institutions.
Sole proprietors are generally not required to file unless they have registered with the Secretary of State’s office. Single-member LLCs, on the other hand, are typically required to file a BOI report unless exempt.
The report is filed through FinCEN’s online reporting system and must be updated in the event of any changes to the company’s information. Failure to comply with the reporting requirement can result in civil penalties of up to $500 per day and potential criminal penalties.
Business owners are urged to familiarize themselves with the requirements and deadlines for filing the BOI report to avoid facing hefty fines and legal consequences.