When running a business, keeping up with regulatory compliance is essential—not just to protect your business reputation but to avoid hefty fines and potential legal consequences. One such critical compliance obligation is the Beneficial Ownership Information Reporting (BOIR) requirement.
This blog post breaks down what BOIR entails, why it’s essential, and the risks if you fail to comply.
What is BOIR?
The BOIR requirement, stemming from the Corporate Transparency Act (CTA), mandates that certain businesses in the U.S. report information about their beneficial owners. A beneficial owner is generally anyone who directly or indirectly owns or controls 25% or more of the company or has significant decision-making authority within it.
This reporting requirement was introduced to combat money laundering, terrorism financing, and other illicit activities. The data collected will be used by the Financial Crimes Enforcement Network (FinCEN) to help prevent anonymous shell companies from hiding criminal assets.
Who Needs to File BOIR?
Nearly every business entity in the U.S., from LLCs to corporations and partnerships, must file BOIR. However, there are exemptions for certain entities, like large companies with more than 20 full-time employees, specific nonprofits, and companies that are already highly regulated and subject to similar disclosures.
What Information Must Be Reported?
BOIR filings require the disclosure of each beneficial owner’s:
-
- Full name
- Date of birth
- Current address
- Unique identifying number (from a driver’s license, passport, or other approved government ID)
- Company Legal Name
- EIN
The filing must be updated within 30 days if any reported information changes, ensuring FinCEN always has accurate and up-to-date information.
The Risks of Not Filing BOIR
Failing to file your BOIR or reporting incorrect information can lead to significant penalties:
- Civil Fines: FinCEN may impose fines of up to $500 per day for every day the report is late or inaccurate. This can quickly add up for ongoing non-compliance.
- Criminal Penalties: Willfully failing to file or providing false information can lead to severe criminal charges, including fines up to $10,000 and even imprisonment of up to two years.
These penalties highlight the seriousness of BOIR compliance. For small businesses, the costs of non-compliance can be devastating and may lead to prolonged financial and legal struggles.
How to Ensure Compliance with BOIR
- Know Your Filing Deadlines: The initial BOIR filing deadline is set for January 1, 2024. Newly formed businesses after January 1, 2025 date must file within 30 days of their formation.
- Maintain Accurate Records: Keeping an organized record of ownership information makes compliance much easier and helps you respond promptly to changes.
- Work with a Legal Professional: Because BOIR is a new requirement, understanding all its nuances may be challenging. Working with a law firm that focuses on compliance, like Lengea Law, can provide peace of mind and help avoid costly mistakes.
Why BOIR Matters
BOIR is designed to increase transparency and make it more difficult for criminals to operate anonymously. By filing accurately and on time, businesses contribute to a safer, more transparent marketplace. Furthermore, proactive compliance keeps your business clear of the fines and legal issues that accompany non-compliance.
Final Thoughts
Staying on top of BOIR requirements is an essential step in responsible business ownership. By meeting your reporting obligations, you protect your business and contribute to a more accountable corporate landscape. For questions or help with BOIR compliance, reach out to Lengea Law—we’re here to help your business stay on the right side of the law.
Contact us today to ensure your business meets this regulatory requirement, safeguarding your company’s future.