Starting soon, many business owners will need to meet new filing requirements to comply with federal regulations. Here’s a quick guide to understanding the BOI filing and what it means for your business.
What is BOI Form Filing?
BOI, or Beneficial Ownership Information filing, is a report that businesses submit to the government, revealing who really owns or controls the company. This filing is designed to improve transparency around business ownership.
Who Needs to File?
Most business entities, including LLCs and corporations, must file a BOI report if they have an owner with at least 25% ownership or a significant role in the business’s decision-making. However, sole proprietorships and unregistered partnerships are generally exempt from this requirement, even if they have an Employer Identification Number (EIN).
What Information is Needed?
For each person who owns or controls the business, the following details are required:
- Name
- Address
- Date of birth
- A unique ID number (such as from a driver’s license or passport)
When Do You Have to File?
Existing Businesses: If your business was established before 2024, you have until January 1, 2025, to submit your BOI report. New Businesses: Businesses formed after 2024 must file their BOI report within 30 days of formation.
Why Is This Happening?
This new requirement is intended to combat illicit activities by increasing transparency. The government aims to prevent criminals from using businesses to hide illegal activities, so they now ask for more specific information about who owns or controls these entities.
What Happens If You Don’t File?
Failure to file a BOI report, or filing false information, can result in penalties. Here’s what you could face:
- Fines: Businesses that miss the filing deadline could be fined up to $500 per day until the report is submitted.
- Civil Penalties: Additional civil fines may be applied for incomplete or inaccurate information.
- Criminal Penalties: Knowingly providing false information or refusing to file can lead to criminal charges, including fines and potential jail time.
- Increased Scrutiny: Failure to file may attract regulators’ attention, prompting further investigation into your business practices.
- Harm to Business Reputation: Not meeting BOI requirements could damage your business’s reputation, particularly with banks and partners who prioritize compliance.
Stay Compliant to Avoid Penalties
Filing on time helps your business avoid these penalties and maintains your good standing with government agencies, banks, and business partners. Make sure to stay informed on BOI requirements to keep your business compliant and avoid unwanted consequences.
