NEW REPORTING REQUIREMENT:
Simply put, most small to medium sized companies are now required to identify all individuals who exercise substantial control over the company. An existing company must file its initial Beneficial Ownership Information Report by December 31, 2024. Supplemental Reports are required to be filed if there are any changes to the ownership or management of the company.
(Please see below if your company is created after January 1, 2024.)
Among other information, the Report requires a Federal Employer Identification Number, the residential address of all relevant persons, and a copy of a government-issued photo ID.
A. “Company” – Corporation or Limited Liability Company
B. “Substantial Control” – An individual exercises substantial control over a company if the individual meets any of following four general criteria:
1) The individual is a corporate officer or manager of an LLC;
2) The individual has authority to appoint or remove certain officers or a majority of directors of the reporting company;
3) The individual is an important decision-maker; or
4) The individual has any other form of substantial control over the company.
C. “Beneficial Owner” – A beneficial owner is any individual who, directly or indirectly:
1) Exercises substantial control over the company; or
2.) Owns or controls at least 25 percent of the ownership interests of a company.
An individual might be a beneficial owner through substantial control, ownership interests, or both. A company can have multiple beneficial owners. For example, a company could have one beneficial owner who exercises substantial control over the company, and a few other beneficial owners who own or control at least 25 percent of the ownership interests of the company. A company could have one beneficial owner who both exercises substantial control and owns or controls at least 25 percent of the ownership interests of the company. There is no maximum number of beneficial owners who must be reported. There is no limit to the number of individuals who can be reported for exercising substantial control.
D. “Beneficial Ownership Information Report” – BOI Report
SPECIFIC INFORMATION REQUIRED:
Among other information, the Report requires a Federal Employer Identification Number, the residential address of all relevant individuals, and a copy of a government-issued photo ID for each Beneficial Owner.
The initial Report must by December 31, 2024. Additionally, a supplemental Report must be filed any time there are any changes to the ownership or management of the company.
PENALTIES FOR NON-REPORTING:
The willful failure to report complete or updated beneficial ownership information to FinCEN, or the willful provision of or attempt to provide false or fraudulent beneficial ownership information may result in civil or criminal penalties, including civil penalties of up to $500 for each day that the violation continues, or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000. Corporate officers of a company that fail to file a required BOI Report may be held accountable for that failure.
Providing false or fraudulent beneficial ownership information could include providing false identifying information about an individual identified in a BOI Report, such as by providing a copy of a fraudulent identifying document or photo ID. Additionally, a person may be subject to civil and/or criminal penalties for willfully causing a company not to file a required BOI Report or to report incomplete or false beneficial ownership information to FinCEN.
REQUIREMENTS FOR BUSINESS ENTITIES CREATED AFTER JANUARY 1, 2024:
If your company is created or registered to do business in the United States on or after January 1, 2024, and before January 1, 2025, it will have 90 calendar days after receiving actual or public notice that the company’s creation or registration is effective to file its initial BOI Report. Specifically, this 90-calendar day deadline runs from the time the company receives actual notice that its creation or registration is effective, or after a secretary of state or similar office first provides public notice of the company’s creation or registration, whichever is earlier. In Illinois, the effective date of the registration is stamped on the Articles of Incorporation or Articles of Organization.
If your company is created or registered on or after January 1, 2025, it will have 30 calendar days from actual or public notice that its creation or registration is effective to file its initial BOI Report.