Updating Your Beneficial Ownership Report

Times have changed, and so have the reporting requirements for new and existing entities. As a business owner, staying compliant with the regulations set forth by the Financial Crimes Enforcement Network (FinCEN), a division of the U.S. Treasury Department, is crucial. A key component of this compliance is the Beneficial Ownership Information (BOI) reporting requirement.

What is a BOI Report?

The Beneficial Owner Report, filed with FinCEN, is a vital regulatory obligation for certain business entities in the United States. This mandate requires corporations, limited liability companies (LLCs), and similar entities to disclose information about their beneficial owners. A beneficial owner is defined as any individual who ultimately owns or controls the company, typically someone who owns 25% or more of the company or exercises significant control over it. This blog post will detail the actions necessary within a corporation or LLC that has already submitted their initial Beneficial Owner Report, which requires updating the BOI report, along with the filing deadlines.

Beneficial ownership refers to the individuals who own or control a company. FinCEN requires certain entities to report information about their beneficial owners to help combat financial crimes such as money laundering and terrorism financing. Several actions within a Corporation or LLC can trigger the requirement to file an update with FinCEN for companies that have already submitted their initial BOI report.

Change of Address

One such action is a change of address. When there is a change in the principal place of business or any address associated with the beneficial owners, an update must be reported. The time frame for this update is strict; it must be submitted within 30 days of the change. Also, any changes to the directors or senior officers of the entity must be reported. This includes appointments, resignations, or replacements, and the update must also be filed within 30 days of the change.

Change of Beneficial Ownership

Another critical action is a change in beneficial ownership. If new owners acquire ownership or existing owners sell their ownership, this must be reported to FinCEN. Again, the time frame for submitting this update is within 30 days of the change. Additionally, if the entity starts doing business under a different name (DBA), this change must be reported and it must be filed within the same 30-day window.

While Harvard Business Services, Inc. does not offer a service for FinCEN filings, we highly recommend FinCENReport.com. They provide an effortless platform for companies to file the initial Beneficial Ownership Information (BOI) along with the changes to the initial report to keep the company in compliance with the Corporate Transparency Act (CTA). FinCENReport.com offers a user-friendly platform that simplifies the filing process, professional guidance to ensure accuracy and compliance, and timely updates to ensure you never miss a deadline. Alternatively, business owners can access FinCen’s Reporting Portal by visiting the FinCEN website at https://www.fincen.gov/boi.

Failure to inform FinCEN and file the required updates to the Beneficial Owner Report can lead to significant penalties. Non-compliance can result in civil penalties of up to $500 per day for each day the violation continues, quickly adding up to substantial financial burdens on the entity. In severe cases, willful failure to report or provide false information can result in criminal penalties, including fines of up to $10,000 and/or imprisonment for up to two years. Beyond financial penalties, non-compliance can also damage the entity’s reputation, affecting relationships with banks, investors, and customers. Legal actions and financial penalties can disrupt business operations and lead to further scrutiny from regulatory authorities.

Staying compliant with FinCEN's BOI reporting requirements is a vital new aspect of running a corporation or LLC. By promptly reporting changes such as address modifications, director or officer changes, changes in beneficial ownership, and DBA updates, you ensure that your entity remains compliant with regulatory authorities. For more detailed information and specific guidance, refer to FinCEN’s BOI Small Entity Compliance Guide. By understanding and adhering to these requirements, you can focus on growing your business while maintaining compliance with the new federal regulations.