When advising clients on filing FinCEN’s Beneficial Ownership Information (BOI) reporting obligations, professionals should offer clear, practical guidance to ensure compliance and mitigate potential risks. 

It is obviously helpful to start out by educating small business clients on the fundamentals of BOIR filing:

   – Who needs to file: Explain that most small corporations, LLCs, and similar entities must comply unless specifically exempt.

   – What needs to be reported: Discuss the required information, such as names, dates of birth, addresses, and ID numbers of beneficial owners (anyone with 25% or more ownership or substantial control).

   – Filing deadlines: Highlight the deadlines—new businesses must file upon formation, and existing businesses have until the start of 2025.

Small business ownership structures can be complex.   Professionals should emphasize that beneficial ownership extends to anyone with substantial control, even if their equity stake is less than 25%.  For example, CPAs should direct their clients to experts who can help them identify all individuals who qualify as beneficial owners, ensuring no key person is missed.  Discuss how trusts are to be handled.

The importance of accurate and up-to-date documentation should be stressed:

   – Maintain records: Recommend that clients keep detailed records of beneficial owners and any changes over time. Establishing a system for periodic updates will help ensure compliance in the future.

   – Secure documentation: Encourage clients to securely store identifying information, such as government-issued ID numbers, to ensure data privacy and protection.

Professionals should inform clients of the risks of non-compliance:

   – Fines and penalties: Non-compliance can result in daily fines of $591 per day, potentially leading to substantial financial liability.

   – Business risks: Emphasize that failing to comply could lead to regulatory investigations or civil penalties, which can be costly and damaging to the business’s reputation.

For businesses that may find the filing process challenging, you should either:

   – Assist with filing: Offer to help prepare and file the BOIR on behalf of the client or coordinate with professionals focused on such filings.

   – Refer to a Compliance specialist: CPAs can also recommend working with a compliance expert or other professional specializing in corporate governance and regulatory filings.

Clients should be told to approach BOI filings proactively:

   – Plan for future updates: Encourage clients to set up procedures for regularly reviewing and updating beneficial ownership information to avoid missing future reporting obligations.

   – Consult early: Suggest addressing BOIR filing well in advance of deadlines to prevent rushed submissions that could lead to errors. Professionals who are diligent and invest the time can easily help their clients navigate FinCEN’s BOI reporting obligations effectively, minimizing risk and ensuring ongoing compliance.