What’s the Purpose of It?
You may not be aware, but the United States is a haven for money laundering. BOI reporting is an attempt to crack down on anonymous shell companies, and so the government wants to know who the actual individuals behind the entity are. This is known as the beneficial owner. A beneficial owner is an individual who either directly or indirectly exercises substantial control over the reporting company OR who owns or controls at least 25% of the reporting company’s ownership interests.
Most corporations, limited liability companies (LLCs), limited partnerships, and certain other entities are subject to the filing requirements. This includes LLCs that are taxed as disregarded entities (Schedule C, E, F). Generally, sole proprietors and general partnerships are exempt, but single-member LLCs are included. Larger and regulated businesses (entities with more than 20 employees and $5 million in revenue), along with government-regulated businesses, are exempt. Non-profit organizations are also exempt from this.
What Does BOI Reporting Involve?
You must provide the individual’s full legal name; date of birth; complete current address; and a unique identification number and issuing jurisdiction from a non-expired U.S. passport, state driver’s license, other state, local, or tribal identification document, or foreign passport if nothing else is available (along with an image of the document).
For new entities, you must provide the company applicant information. For a domestic reporting company, the company applicant refers to the person who personally submits the document that establishes the company. In the case of a foreign reporting company, it is the person who personally submits the document that initially registers the company. Additionally, for both domestic and foreign reporting companies, if the filing involves multiple individuals, the company applicant is the person mainly in charge of overseeing or managing the filing process.
For entities in existence before January 1, 2024, you have until January 1, 2025 to file your initial report. For entities formed on or after January 1, 2024, you have 90 days to file your initial report (this was recently extended from 30 days).
While there is no yearly filing requirement, certain changes require an updated report. If there is any change to the information reported for the reporting company—such as registering a new business name, a change in beneficial owners, or an address change for the business or beneficial owners—an update is required within 30 days.
What Are the Penalties for Non-compliance?
Understand your responsibilities to adhere to this new law—this is critical. If you are looking for expert tax guidance, please book a discovery call with The Youngblood Group today.
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