![Understanding Beneficial Ownership Information (BOI) Reporting](https://www.taxconnections.com/taxblog/wp-content/uploads/OLIVIER-WAGNER-89.jpg?resize=90%2C90&ssl=1)
Starting January 1, 2024, a crucial new mandate requires businesses to engage in beneficial ownership information reporting. The Financial Crimes Enforcement Network (FinCEN) now requires certain entities to disclose their beneficial owners to enhance transparency and combat illicit activities. This comprehensive guide will explain what beneficial ownership information is, how to determine beneficial ownership, reporting requirements, penalties for non-compliance, who needs to file a BOI report in 2024, and specific requirements for LLCs.
WHAT IS BENEFICIAL OWNERSHIP INFORMATION (BOI)?
Beneficial Ownership Information (BOI) refers to details about individuals who own or control a company. This information is essential for ensuring transparency and preventing the misuse of corporate structures for illicit activities such as money laundering and terrorism financing. BOI reporting is a key component of the Corporate Transparency Act, which aims to increase the accountability of business entities.
HOW TO DETERMINE BENEFICIAL OWNERSHIP?
A beneficial owner is an individual who owns at least 25% of a company or has substantial control over it. To determine beneficial ownership, consider the following steps:
Identify Individuals with Substantial Control: These include senior officers, key decision-makers, and individuals with significant influence over the company’s operations.
Assess Ownership Interests: Look at equity, stock, voting rights, capital or profit interests, and other mechanisms establishing ownership.
Calculate Ownership Percentages: Determine if individuals hold 25% or more of these interests.
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