Navigating Beneficial Ownership Information (BOI) Reporting: What You Need to Know

As we approach the January 1, 2025, deadline for Beneficial Ownership Information (BOI) reporting, it’s crucial for businesses to understand the new requirements and take action to ensure compliance. At CMH Advisors, we are here to guide you through this process and offer our expertise in preparing and filing your BOI report.

Understanding BOI Reporting

BOI reporting is a regulatory requirement aimed at increasing transparency around business ownership. Entities required to report must disclose information about their beneficial owners—the individuals who ultimately own or control the business.

Who Needs to Report?

A reporting entity is generally defined as:

• Domestic Reporting Companies: Corporations, limited liability companies (LLCs), or entities created by filing a document with a state or tribal jurisdiction.
• Foreign Reporting Companies: Entities formed under the law of a foreign country and registered to do business in the U.S. by filing with a state or tribal jurisdiction.

Exemptions include:

• Tax-Exempt Entities: §501(c) organizations, §527 political organizations, and certain trusts.
• Large Operating Companies: Entities with more than 20 full-time employees in the U.S., an operating presence at a physical office, and over $5 million in gross receipts.
• Inactive Entities: Entities not engaged in active business, with no recent changes in ownership or financial transactions.
• Sole Proprietorships: Generally, not considered reporting entities.

The federal tax classification of your business is irrelevant in determining if it is a reporting company.

Who is a Beneficial Owner?

A beneficial owner is anyone who:

• Exerts Substantial Control: Holds a senior officer position or has significant influence over major decisions.
• Owns or Controls 25% of Ownership Interests: Directly or indirectly.

Beneficial owners must be reported regardless of constructive ownership rules or community property laws.

What’s Required?

If your business is subject to BOI reporting, the first step is to ensure that all beneficial owners acquire a FinCEN ID. This ID can be obtained by completing the application on the FinCEN website. Once you have the FinCEN IDs, keep them handy.

Deadlines for Reporting

• Entities Existing Before January 1, 2024: Initial report due by January 1, 2025.
• Entities Created During 2024: Initial report due within 90 days.
• Entities Created On or After January 1, 2025: Initial report due within 30 days.

Updated or corrected reports must be filed within 30 days of any changes or inaccuracies.

Penalties for Noncompliance

Noncompliance with BOI reporting requirements can lead to significant penalties, including:

• Civil penalties up to $500 per day (with a maximum of $10,000).
• Imprisonment for up to two years for willful violations.

We’re Here to Help

Navigating BOI reporting can be complex, but you don’t have to do it alone. CMH Advisors is committed to providing you with the support and expertise you need to ensure a smooth and timely filing process. To meet the filing requirements and gather any necessary information before the January 1, 2025, deadline, please let us know by October 31, 2024, if you would like our assistance in filing. For those who choose to handle it independently, visit BOI E-FILING for guidance.
If you have any questions, don’t hesitate to reach out to your account manager directly or email us at team@cpataxteam.com.