Jesseca Lane
Brand & Marketing
Connor Patterson
Co-Founder
Evan Shoemaker
Head of Product

In the ever-evolving landscape of financial regulations, understanding and complying with reporting requirements is paramount for businesses seeking to maintain a positive reputation and avoid potential penalties. Among these crucial reports is the BOI (Beneficial Ownership Information) report, a document that plays a pivotal role in preventing financial crimes and promoting transparency. In this comprehensive guide, we will delve into the intricacies of BOI reports, exploring their purpose, significance, and the entities required to file them. We will also provide a step-by-step guide on how to file a BOI report, ensuring that businesses are well-equipped to fulfill their reporting obligations. So, fasten your seatbelts as we embark on a journey into the realm of BOI reporting!

What is a BOI Report?

A BOI report is a comprehensive document that unveils the identities of the individuals who ultimately own or control a legal entity, be it a corporation, a limited liability company (LLC), or a partnership. This report plays a pivotal role in preventing illicit activities such as money laundering and terrorist financing by shedding light on the true decision-makers behind the scenes. By identifying the beneficial owners, authorities can effectively combat these criminal enterprises and safeguard the integrity of the financial system.

Why do businesses have to file a BOI Report?

In the realm of financial regulations, the BOI (Beneficial Ownership Information) report stands as a crucial document that sheds light on the true identities behind legal entities. Also known as the Beneficial Ownership Information Report, it serves as a powerful tool in combating financial crimes and fostering transparency. By delving into the intricacies of a BOI report, we gain insights into its purpose, significance, and the entities obligated to fulfill this reporting requirement.

The BOI report is filed with the Financial Crimes Enforcement Network (FinCEN), a bureau under the umbrella of the U.S. Department of the Treasury. This specialized agency is tasked with safeguarding the financial system from illicit activities, and the BOI report serves as a valuable tool in achieving this objective. By collecting and analyzing information on beneficial ownership, FinCEN is better equipped to detect and disrupt financial crimes, ensuring a safer financial landscape for all.

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Who must file a BOI Report?

Understanding which entities are required to file a BOI report is crucial for ensuring compliance with the law and avoiding potential penalties. The following entities must file a BOI report with FinCEN:

  • Corporations, LLCs, and other entities formed in the United States: This includes all business entities created or organized under the laws of the United States or any of its states or territories, regardless of their size or industry.
  • Foreign entities registered to conduct business in the United States: Any foreign entity that is registered to conduct business in the United States must also file a BOI report. This includes branches, subsidiaries, and representative offices of foreign companies that have a physical presence in the U.S.
  • Entities that own at least 25% of another entity: If an entity owns at least 25% of the voting interests of another entity, it is considered a beneficial owner and must file a BOI report. This applies to both domestic and foreign entities that meet this ownership threshold.
  • Entities that own real estate in the United States: Any entity that owns real estate in the United States, regardless of its location or citizenship, must file a BOI report. This includes individuals, corporations, partnerships, and trusts that hold direct or indirect ownership interests in U.S. real estate.
  • Entities with a financial interest in an entity that owns real estate in the U.S.: If an entity has a financial interest in another entity that owns real estate in the United States, it may also be required to file a BOI report. This includes entities that hold mortgages, liens, or other secured interests in U.S. real estate.

BOIR Filing requirements can be complex and vary depending on the specific circumstances of each entity. It is essential to consult with legal or financial professionals to determine whether your entity is required to file a BOI report and to ensure compliance with all relevant regulations.

File with Palm's easy & automated process. We're here to help small businesses like yours win.

What information is included in a BOI Report?

Now, let's delve into the specific information that must be included in a BOI report to ensure accurate and compliant reporting. At the core of the report lies the identification of each beneficial owner. This entails providing their full legal name, residential or business address, date of birth, and a unique taxpayer identification number, such as a Social Security number or Employer Identification Number. These details help paint a clear picture of the individuals who ultimately own or control the entity.

In addition to personal information, the BOI report also requires a description of each beneficial owner's ownership interest in the entity. This includes specifying the nature of their ownership, such as whether they are a direct or indirect owner, as well as the percentage or amount of ownership they hold. This information is crucial for understanding the extent of their control and influence over the entity's activities and decision-making processes.

Furthermore, the BOI report may also request additional details about the beneficial owners, such as their occupation, nationality, and country of residence. These pieces of information provide a more comprehensive profile of the individuals involved and assist in assessing potential risks associated with the entity.

By providing this comprehensive set of information, BOI reports empower financial institutions and government agencies to effectively identify and verify the true owners of legal entities. This plays a vital role in combating financial crimes, promoting transparency, and upholding the integrity of the financial system.

File with Palm's easy & automated process. We're here to help small businesses like yours win.

How to file a BOI report

Filing a BOI report is a straightforward process, but it requires accurate information and attention to detail. To get started, you'll need to gather the following information:

  • Legal name and address of the reporting entity
  • Employer Identification Number (EIN)
  • Information about the beneficial owners, including their full names, dates of birth, addresses, and ownership percentages. Beneficial owners are individuals who own or control more than 25% of the entity.
  • A government-issued identification document, such as a passport or driver's license, for each beneficial owner

Once you have gathered the necessary information, you can file with Palm's easy & automated process. The BOI report must be filed within 30 days of the date the entity is created or registered with the government. There is no filing fee associated with the BOI report.

By following these steps and providing accurate information, you can ensure that your entity complies with the BOI reporting requirements and contributes to the fight against financial crimes.

File with Palm's easy & automated process. We're here to help small businesses like yours win.

Penalties for failing to file a BOI Report

Failing to comply with BOI reporting requirements can result in severe consequences that can significantly impact businesses. The Financial Crimes Enforcement Network (FinCEN) takes BOI reporting seriously and enforces strict penalties for non-compliance. These penalties serve as a deterrent to encourage entities to fulfill their reporting obligations and maintain transparency in financial transactions.

One of the primary penalties for failing to file a BOI report is substantial civil penalties. FinCEN has the authority to impose civil penalties of up to what is a BOI Report $500,000 for each violation. The amount of the penalty depends on the severity of the violation and the entity's history of compliance. These penalties can be a significant financial burden for businesses and can damage their bottom line.

In addition to civil penalties, failure to file a BOI report may also result in criminal charges. Knowing failure to file a BOI report is a criminal offense, and individuals or entities found guilty of this offense may face imprisonment, fines, or both. Criminal charges can severely damage a business's reputation and make it difficult to conduct business in the future.

Furthermore, entities that fail to file a BOI report may be excluded from federal contracting opportunities. Government agencies and contractors are required to comply with BOI reporting requirements, and failure to do so can result in the loss of lucrative contracts and business opportunities. This can have a significant impact on a business's revenue and growth potential.

Moreover, failing to file a BOI report can lead to restricted access to financial services. Financial institutions are required to verify the beneficial ownership information of their customers, and those without a BOI report on file may face difficulties in opening accounts, obtaining loans, or conducting financial transactions. This can severely hinder a business's ability to operate effectively.

Finally, non-compliance with BOI reporting requirements can cause irreparable reputational damage. Businesses that fail to meet their reporting obligations may be perceived as untrustworthy and non-transparent, which can erode customer trust and confidence. A damaged reputation can have long-term consequences for a business, making it difficult to attract new customers, retain existing ones, and establish partnerships.

Therefore, it is crucial for businesses to understand and comply with BOI reporting requirements to avoid these severe penalties and protect their reputation and financial interests.

File with Palm's easy & automated process. We're here to help small businesses like yours win.

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