What LLC and Corporation Owners Need To Know About FinCEN BOI Registration
Attention all LLC and corporation owners: A crucial deadline is fast approaching that could have significant financial implications for your business.
The Financial Crimes Enforcement Network (FINCEN) requires registration of certain business entities, and failure to comply could result in hefty daily fines of $500.00.
New Federal Reporting Requirement for Beneficial Ownership Information (BOI)
Effective January 1, 2024, many companies in the United States must report information about their beneficial owners—the individuals who ultimately own or control the company—to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.
Filing is simple, secure, and free of charge. Beneficial ownership information reporting is not an annual requirement. Unless a company needs to update or correct information, a report only needs to be submitted once.
What is Beneficial Ownership Information?
Beneficial ownership information refers to identifying information about the individuals who directly or indirectly own or control a company. There is no fee for submitting your beneficial ownership information report to FinCEN, and those authorized by the reporting company to act on its behalf can submit a BOI report. This includes employees, owners, and external service providers.
Who Needs To File FinCEN Benefit Ownership Information (BOI)
You must file if your company meets the definition of a “reporting company” and is not exempt. Companies created by filing a document with the Secretary of State or any similar office under the law of a state or Indian tribe are considered reporting companies and are non-exempt. The same goes for a foreign company that was registered to do business in any U.S. state or Indian tribe by such a filing.
This means that they must file and is inclusive of the following entities:
- LLCs (key for our business-owners, self-employed individual borrowers and real estate investor borrowers operating under an LLC)
- Corporations or similar entities
- Any company that experiences new changes must update their information within 90 days.
Exemptions
Some entities may be exempt, including:
- Inactive entities
- Public accounting firms
- Investment advisors
- Large operating companies
- Insurance companies
Importance of Understanding LLC Reporting Requirements
As an LLC owner or corporation owner who is not exempt, staying informed about your LLC reporting requirements is not just good business practice — it’s essential for legal compliance, financial security and reputation protection. Recent changes in regulations, particularly those implemented by the Financial Crimes Enforcement Network (FinCEN), have made this understanding more critical than ever.
Though we at Defy Mortgage cannot provide financial advisory services, we can reinforce the importance of understanding and complying with LLC reporting requirements to position your business for success, build trust, and ensure long-term stability. As regulations evolve, staying informed and proactive in your reporting practices is more important than ever.
- Legal Compliance: Adhering to LLC reporting requirements keeps your LLC in good standing with state and federal authorities. Compliance helps maintain your limited liability protection, a key benefit of the LLC structure.
- Financial Consequences: As highlighted in the image, penalties for non-compliance can be severe – up to $500 per day for failing to file with FinCEN. These fines can quickly accumulate, potentially threatening your business’s financial stability.
- Avoiding Operational Disruptions: Non-compliance can lead to operational issues, including potential suspension of your LLC’s ability to conduct business. Staying compliant helps ensure smooth day-to-day operations without legal interruptions.
- Transparency and Trust: Proper reporting enhances your company’s transparency, which can boost trust with partners, investors, and customers. It demonstrates your commitment to ethical business practices.
Important FinCEN Benefit Ownership (BOI) Deadlines
For businesses registered before January 1, 2024:
- Non-exempt companies and LLCs must file BOI by January 1, 2025.
- Failure to file can result in penalties of $500 PER DAY.
For businesses registered on or after January 1, 2024:
- Non-exempt companies and LLCs must file BOI within 90 calendar days of registration.
- Non-exempt companies and LLCs must file BOI within 30 calendar days after receiving actual or public notice that its creation or registration is effective.
- Any new changes must be updated within 90 days.
- Failure to file can result in penalties of $500 PER DAY.
How to File FinCEN Benefit Ownership Information
Reporting companies report beneficial ownership information electronically through FinCEN’s website: www.fincen.gov/boi. The system provides a confirmation of receipt once a completed report is filed with FinCEN.
Don’t risk daily $500 penalties. If you own an LLC or corporation, take action now to ensure compliance with FinCEN registration requirements. Review your business status, check for exemptions, and file before the applicable deadline. To submit your registration, visit https://fincen.gov/boi and click “file BOIR”.
Unsure about your filing obligations? Consult with a legal or financial professional to determine your company’s status and filing requirements.
