Beneficial Ownership Information

      In an increasingly complex financial landscape, transparency and accountability are critical to ensuring a well-regulated economy. One significant development in this regard is the Corporate Transparency Act (CTA), which mandates the disclosure of Beneficial Ownership Information (BOI) to the Financial Crimes Enforcement Network (FinCEN). The goal of this legislation is to prevent illegal activities such as money laundering, terrorist financing, and tax evasion by increasing transparency around who controls and benefits from U.S.-registered legal entities.
 

       At Coastal Accounting & Tax Advisors, we understand that new regulatory requirements can be challenging, especially for small businesses and corporations with limited resources. This is where we come in, helping our clients navigate the complexities of BOI reporting to FinCEN, ensuring compliance while allowing them to focus on what they do best: running their businesses.

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What Is Beneficial Ownership Information (BOI)?

     Beneficial ownership refers to the individuals who either own or control a company, even if they do not appear on official company paperwork like stock certificates or board meeting minutes. According to the Corporate Transparency Act, most corporations, limited liability companies (LLCs), and other similar entities in the U.S. must disclose their beneficial owners.

A beneficial owner is anyone who:

• Directly or indirectly exercises substantial control over the entity.

• Owns or controls at least 25% of the entity’s ownership interests.

This information is crucial for regulatory bodies and law enforcement to track suspicious financial activities, thus preventing the misuse of shell companies and other legal entities for illegal purposes.
 

Why Is BOI Reporting Necessary?

     BOI reporting is part of the government’s broader efforts to strengthen anti-money laundering (AML) and counter-terrorist financing (CTF) regulations. Before the CTA, the U.S. lacked a unified system for tracking beneficial ownership of legal entities, which made it easy for bad actors to hide behind anonymous corporations.

     The Financial Crimes Enforcement Network (FinCEN), a bureau within the U.S. Department of the Treasury, is responsible for enforcing BOI reporting requirements. Once companies file their BOI with FinCEN, the information is maintained in a secure database that can only be accessed by authorized government agencies.
 

Who Needs to Report BOI?

     Not all entities are required to file BOI with FinCEN. However, the CTA covers a broad range of businesses, meaning that many entities will be required to comply. Companies required to file include:

• Corporations

• Limited liability companies (LLCs)

• Limited partnerships and other similar entities registered in the U.S. or conducting business in the U.S.

     Exemptions exist for certain types of entities, such as publicly traded companies, banks, credit unions, investment firms, and other highly regulated businesses, which already report beneficial ownership through other channels.
 

The BOI Filing Process

     Beginning January 1, 2024, entities covered by the CTA will have 30 days to submit their BOI report after incorporation or registration. Entities formed or registered before this date will have until January 1, 2025, to comply.

The report must include:

• The full name, date of birth, address, and identification number (from a U.S. government-issued ID or passport) of each beneficial owner.

• Any changes in beneficial ownership must be updated within 30 days of the change.
   

Failure to comply with BOI reporting requirements can result in civil or criminal penalties, including fines of up to $500 per day and even imprisonment.

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For more details on reporting and compliance, you can visit the FinCEN website and the Corporate Transparency Act FAQ page.
 

How Coastal Accounting & Tax Advisors Can Assist

At Coastal Accounting & Tax Advisors, we are committed to providing our clients with expert guidance in navigating new financial regulations, including BOI reporting. Here are a few ways we can assist:

1. Evaluation of Reporting Requirements

Understanding whether your business needs to report BOI is the first step in ensuring compliance. Our team can help assess your entity’s structure and ownership to determine whether you are subject to the CTA’s BOI reporting requirements.

2. Preparation of BOI Reports

Collecting and organizing the necessary information for BOI reporting can be time-consuming, especially for businesses with complex ownership structures. We can handle the preparation of your BOI reports, ensuring that all the required information is complete and accurate before submission to FinCEN.

3. Timely Submission and Updates

Deadlines are critical to avoiding penalties. Coastal Accounting & Tax Advisors will ensure that your BOI report is filed on time and that any changes to beneficial ownership are updated within the 30-day window required by law.

4. Guidance on Exemptions and Special Cases

Certain entities may be exempt from BOI reporting. If you believe your business may qualify for an exemption, we can help evaluate your status and advise on the appropriate course of action.

5. Ongoing Compliance Monitoring

As regulations evolve, staying compliant can be a moving target. Our team offers ongoing compliance monitoring to ensure that your business remains in good standing with all applicable reporting requirements.

Required Information to File your BOI Report

1. Identifying Information of the Legal Entity

Every legal entity subject to BOI reporting must provide:

• Legal Entity Name: The full legal name of the entity as it is registered.

• Principal Business Address: The primary business address where the entity conducts its activities.

• Jurisdiction of Formation: The U.S. state or foreign country where the entity was formed or registered.

• Taxpayer Identification Number (TIN): Typically the entity’s EIN (Employer Identification Number) issued by the IRS or, for foreign entities, another identification number.

2. Information on Each Beneficial Owner

For each beneficial owner—any individual who owns or controls at least 25% of the entity or exercises substantial control—the following information must be provided:

• Full Legal Name: The complete name of the individual as shown on government-issued identification.

• Date of Birth: The individual’s exact date of birth.

• Residential Address: The individual's home address, not a business address.

• Identification Number and Document:

  • A unique identification number from one of the following documents:

    • U.S. Passport or foreign passport.

    • U.S. state or tribal government-issued driver's license.

    • U.S. state or tribal government-issued identification card.

    • Foreign-issued identification document, if applicable.

  • The image (copy) of the identification document provided.

3. Information on the Company Applicant (for newly formed entities)

For entities formed after January 1, 2024, the person responsible for registering the entity, known as the company applicant, must also be reported. For this individual, the same information as the beneficial owner is required:

• Full Legal Name.

• Date of Birth.

• Residential Address.

• Identification Number and Document (same as for beneficial owners).

4. Key Documents Needed

• Government-issued identification documents for all beneficial owners and, if applicable, the company applicant (e.g., passports, driver’s licenses, or other approved forms of ID).

• Entity formation documents (e.g., Articles of Incorporation, Certificate of Formation), though these are typically needed to confirm details like jurisdiction of formation.

Conclusion

     FinCEN BOI reporting represents a new era of corporate transparency aimed at preventing financial crimes. However, for many businesses, complying with the new requirements can feel overwhelming. That’s where Coastal Accounting & Tax Advisors can help. We work closely with our clients to ensure they meet their obligations under the Corporate Transparency Act, protecting them from penalties and keeping their focus on business growth.
 

     If you need help with your BOI reporting or have questions about the new regulations, contact Coastal Accounting & Tax Advisors today, and let us take the burden off your shoulders!