In the fast-paced world of business ownership, small and medium-sized business owners already juggle countless responsibilities. Amid this hustle, a new compliance requirement – the Beneficial Ownership Information Report (BOIR) – demands your immediate attention.
If you’ve heard the term but aren’t sure what it means for your business… you’re in the right place. This guide will explain the BOIR, its significance, and how Weston Tax Associates can help simplify this process.
What Is the Beneficial Ownership Information Report?
The BOIR is a compliance mandate introduced under the Corporate Transparency Act (CTA), a law passed as part of the Anti-Money Laundering Act of 2020. The CTA’s goal is to combat illicit activities such as money laundering and terrorist financing by making business ownership more transparent. Specifically, the BOIR requires businesses to disclose information about their beneficial owners – the individuals who ultimately own or control the company.
Unlike tax-related requirements overseen by the IRS, the BOIR is under the jurisdiction of the Financial Crimes Enforcement Network (FinCEN). FinCEN’s role is to maintain a secure database of this ownership information, accessible only to authorized law enforcement agencies and other regulatory bodies.
FinCEN is a division within the U.S. Department of Treasury, much like the IRS, responsible for combating financial crimes committed by ill-willed individuals and organizations. Their task is to prevent money laundering and terrorist financing by collaborating with law enforcement agencies to identify and track suspicious financial activity.
Why Was This Law Enacted?
For years, criminals used anonymous shell companies as a loophole for hiding assets and engaging in illegal activities. The Corporate Transparency Act was designed to close this loophole by mandating that certain entities report their beneficial ownership details. By requiring this disclosure, the law aims to create accountability and prevent abuse of the financial system.
Although compliance adds another layer of responsibility for business owners, the BOIR is an important tool in maintaining financial integrity and preventing fraud.
Who Does the BOIR Apply To?
The BOIR applies broadly to privately owned corporations, limited liability companies (LLCs), and other similar entities registered by filing paperwork with a state or tribal government. However, not every business is affected. Publicly traded companies, banks, and certain other regulated organizations are generally exempt from this requirement. In addition, Sole Proprietorships and General Partnerships are excluded from the BOIR filing requirement.
If you own a privately held business, particularly a small or medium-sized entity, there’s a strong likelihood that this law applies to you. Whether you operate a consultancy, a retail store, or an online business, understanding your responsibilities under the BOIR is essential.
Who Is Considered a Beneficial Owner?
A beneficial owner is any individual who owns or controls at least 25% of a company or has substantial influence over its decision-making. This includes individuals with direct or indirect ownership, such as through a trust or another entity, and those who hold significant managerial authority.
For example, if you own 30% of a business or serve as its CEO with decision-making power, you are considered a beneficial owner and must be included in the BOIR. Understanding this definition is key to ensuring your report is accurate and compliant.
What Needs to Be Reported?
To comply with the BOIR, businesses must provide detailed information about their beneficial owners and the company itself. For individuals, this includes the full legal name, date of birth, a residential or business address, and a unique identifier such as a driver’s license or passport number. For the business entity, the report must include its legal name, physical address, and state of incorporation or registration.
For instance, if you own an LLC based in Texas, you’d need to disclose your personal details as the beneficial owner and provide information about your business, including its legal and physical location. This transparency requirement ensures that ownership structures are clear and traceable.
The Stakes Are High: Why Compliance Matters
Failure to comply with the BOIR can have serious financial and legal consequences. Businesses that fail to file the report or provide false information may face penalties of up to $591 per day until the issue is resolved. For more serious violations, criminal penalties can include fines of up to $10,000 and even imprisonment for up to two years.
Beyond avoiding penalties, timely compliance helps maintain your business’s reputation and good standing with regulators. As trust is a cornerstone of success, being transparent and compliant demonstrates a commitment to ethical business practices.
How Weston Tax Associates Can Help
Navigating new compliance requirements like the BOIR can feel overwhelming, but you don’t have to handle it alone. Weston Tax Associates specializes in simplifying complex regulations for business owners, and we’re here to make this process straightforward and stress-free.
We start with a comprehensive review of your business to determine whether the BOIR applies to you. If it does, we’ll take care of the entire filing process, ensuring accuracy and timeliness. You can also rely on us for ongoing support to stay updated on any future changes to the law.
Getting started is easy. Visit filemyboitoday.com to let us handle your filing, allowing you to focus on growing your business while we take care of compliance.
Final Thoughts…
The Beneficial Ownership Information Report is a critical new requirement for many businesses, designed to promote transparency and prevent misuse of the financial system. While it may seem daunting, compliance doesn’t have to be a burden. With Weston Tax Associates by your side, you can meet your obligations confidently and avoid costly penalties.
Don’t let this new regulation disrupt your business. Take action today to protect your business and ensure you’re fully compliant.
Welcome to the New Age of Accounting. Let’s Begin.
