What is BOI?

Beneficial ownership refers to individuals who either have large shares of ownership or control the business entity. According to the CTA, a beneficial owner is anyone who:

Owns 25% or more of the entity either directly or indirectly, or exercises substantial control over the corporation. BOI reports usually include the following information regarding the beneficial owner.

Name.
Date of birth.

Step 1: Do You Need to File?

The first step is to determine if the business itself is required to file BOI. As discussed and explained above, most companies are exempt from such reports, such as larger companies and others where the business is under control of regulatory bodies, including the CTA. Therefore, there is coverage for small businesses, several other businesses, and hence the need to validate a respective business's filing responsibility with how it is classified by CTA.

Step 2: Identify Beneficial Owners

After a business has become subject to BOI reporting, the following question should be asked: Who is a beneficial owner? Generally, all individual owners with at least 25% of the business and someone who exercises significant control over operations qualify.

Step 3: Collect Needed Information

The success of BOI reporting depends entirely on the accuracy of information being provided. Collect and secure all information of the beneficial owner, such as their name, date of birth, address, or other unique identifier. This is now adopted by many companies and their advisers through the use of digital platforms such as BOI Fincen Filings to collect information that assures accuracy, security, and ease of access.

Step 4. Reporting to FinCEN

With the BOI data gathered, verified, and complete, it then needs to be submitted to FinCEN. FinCEN offers a direct submission option, which can be done using their reporting platform. Compliance software can also be utilized for special programs that help manage and automates submission.

Post-submission, firms must hold copies of the information that has been submitted in case of audit or updates.

Step 5. Update BOI Information as Needed

Not only that, but compliance does not end there with submission. In fact, the CTA requires every business to file an updated BOI report any time the beneficial ownership of any business changes. It can be when the ownership interest changes or new beneficial owners are added; it needs to be filed with an updated report within 30 days of the change.

Conclusion

Of course, while the requirements on BOI reporting under the Corporate Transparency Act can sound scary, it can present companies and their advisors the opportunity to raise their level of compliance work, promote more transparency, and lessen their risk of noncompliance with regulations. Actually, proper planning, knowing what "beneficial ownership" entails, and using the proper technology means firms can turn this challenge into a relatively seamless process as part of compliance.

In light of the ongoing developments and changes in reporting requirements under BOI, proactive compliance stands as the best strategy in helping businesses stay ahead in such an increasingly regulated environment.