Beneficial Ownership Information (BOI) Reporting Summary

 

Many companies are required to report information to FinCEN about the individuals who ultimately own or control them. FinCEN began accepting reports on January 1, 2024. The information below has been summarized for informational purposes.

Background

  • The Corporate Transparency Act of 2020 was passed in 2021 and authorizes FinCEN (Financial Crimes Enforcement Network – Department of Treasury) to administer the collection of beneficial ownership information.
  • Beneficial ownership information (BOI) refers to identifying information about individuals who own or control a company. This can be direct or indirect.
  • Effective January 1, 2024
When is initial reporting required?
  • For companies in existence as of January 1, 2024, initial reporting is required by January 1, 2025.
  • For companies created after January 1, 2024, and before January 1, 2025, initial reporting is due within 90 days.
  • For companies created on January 1, 2025, or later, initial reporting is due within 30 days.
  • Updated / Corrected reports are due within 30 days of the change or error is discovered.

Reporting Companies

Domestic and foreign reporting companies that are created or registered by filing
documents with the secretary of state (SOS) or similar office are subject to the BOI
reporting requirements. This includes a corporation, an LLC, or any other entity type.
Types of reporting companies:
  • Domestic reporting company – companies formed and registered in the United States by filing a document with a Secretary of State or similar office
  • Foreign reporting company – foreign companies REGISTERED in the United States by filing a document with a Secretary of State or similar office
Exemptions most applicable to motorcoach companies and other small businesses:
  • Large operating company
    • Entity employs more than 20 full-time employees (generally an average of at least 30 hours of service per week)
    • More than 20 full-time employees of the entity are employed in the United States
    • The entity has an operating presence at a physical office within the United States. Operating presence at a physical office within the United States means that an entity regularly conducts its business at a physical location in the United States that the entity owns or leases and that is physically distinct from the place of business of any other unaffiliated entity
    • The entity filed a federal income tax or information return in the United States for the previous year demonstrating more than $5,000,000 in gross receipts or sales
    • The entity reported this greater-than-$5,000,000 amount as gross receipts or sales (net of returns and allowances) on the entity’s Form 1120, consolidated Form 1120, Form 1120-S,Form 1065, or other applicable IRS form
    • When gross receipts or sales from sources outside the United States, as determined under federal income tax principles, are excluded from the entity’s amount of gross receipts or sales, the amount remains greater than $5,000,000
  • Inactive entities
    • was in existence on or before January 1, 2020
    • is not engaged in active business
    • is not owned by a foreign person, whether directly or indirectly, wholly or partially
    • has had no ownership changes in the prior 12 months
    • has had no transactions greater than $1,000 in the prior 12 months
    • does not hold any assets

Whose information is reportable?

    • Any individual who directly / indirectly owns or controls at least 25% of the reporting company’s ownership interests
    • Any individual who directly or indirectly exercises substantial control over the reporting company. Examples of substantial control include:
      • Make important decisions about the reporting company’s business, finances, or structure
      • Senior officers such as President, CFO, etc.
    • Exceptions to beneficial owner
      • Minor child (reported by parent/legal guardian)
      • Inheritor / Creditor
      • Accountants / Lawyers (unless qualifies as beneficial owner or company applicant)
      • Employees (unless qualifies as beneficial owner or company applicant)
  • Company applicant
    • individual who directly files the document that creates or registers the reporting company
    • individual primarily responsible for directing or controlling the filing
    • only needs to be provided for the company applicant for companies created or registered after 2023

What Information Must Be Reported

BOI must be reported for the reporting company’s beneficial owners and
certain company applicants.
The following information is required for individuals:
  • Individual’s full legal name
  • Date of birth
  • Street address
  • Unique ID number (Image must be provided)
    • Nonexpired U.S. passport
    • State driver’s license
The following information is required for each reporting company:
  • Company’s legal name
  • DBA
  • Street address
  • State in which company was formed
  • Tax identification number

When to File

Initial Report
For existing reporting companies created or registered before 2024, the initial report is
due January 1, 2025.
For reporting companies created or registered after January 1, 2024, and before
January 1, 2025, the initial report is due 90 days after the entity’s creation or
registration.
For reporting companies created or registered after January 1, 2025, the initial report is
due 30 days after the entity’s creation or registration.
Updated Report
An updated report must be filed when there is a change to previously reported
information about the reporting company, its beneficial owners, or the company
applicant(s). The updated report is due within 30 days of the change. If a reporting
company files an information report and later qualifies for one of the filing exemptions,
an updated report should be filed to report the change in exemption status.
Corrected Report
Corrected reports are required when any information previously reported is discovered
to be inaccurate. The corrected report is due within 30 days after the reporting company
becomes aware or has reason to know of the error.

How to File

Reporting companies must file their BOI reports electronically using the BOI e-filing
portal (https://boiefiling.fincen.gov/)
Two ways to submit reports:
• Fill out a web-based version of the BOI report and submit it online        (https://boiefiling.fincen.gov/fileboir)
• Upload a completed PDF version of the BOI report
• Cannot be faxed or mailed to FinCEN

Penalties for Not Filing

There are civil and criminal penalties for noncompliance or providing false information.
This applies to reporting companies, beneficial owners, senior officers, and company
applicants.
The fine for willfully failing to complete an initial or updated report or for willfully
providing false or fraudulent information to a reporting company is $500 per day, up to
$10,000 and imprisonment for up to two years. The fine for knowingly disclosing or
using BOI without authorization is $500 per day, up to $250,000 and imprisonment for
up to five years.
A safe harbor to avoid penalties is available if a corrected report is filed no later than 90
days after the report with inaccurate information is submitted.

For more detailed information and FAQ, visit www.fincen.gov/boi

Let us at BUSBooks guide you in obtaining tax benefits that are available to your company right now!

Written by Tracy Fickett, CPA and Peter Shelbo, Consultant

BUSBooks is a unique CPA accounting firm dedicated to the motorcoach industry.

The information contained in this communication is general in nature and is not intended, and should not be considered, as legal, accounting, or tax advice provided by BUSBooks, LLC to the reader. The reader is also notified that this material may not apply to or be suitable for the reader’s specific circumstances or needs and may require consideration of additional factors including other tax and non-tax facts and circumstances. BUSBooks, LLC recommends that the reader contact his/her tax professional before taking any action based on this information. BUSBooks, LLC assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

SMART Goals

“Accounting is a useful tool to help your company meet its financial goals” is a theme you may have picked up by now reading the Nerd. This month, I want to touch on a framework for establishing goals. Somewhere in sunny Southern California, while studying to be a a master Nerd, I learned about SMART goals. Let me share and present it to a Busgirl, or guy.

Below is a list of goals your transportation company may have:

  1. Make more money
  2. Increase sales
  3. Control expenses
  4. Increase profitability
  5. Improve cash flow
  6. Increase line run revenues by 20% for 2019 (over 2018)
  7. Increase revenue per mile by 5% by June 2020 as compared to calendar year 2018
  8. Increase revenue per day to $1,200 for the calendar year 2019
  9. Increase line run ridership by 15% for summer 2019 (over summer 2018)
  10. Keep administrative expenses at or below 6% of net sales for 2019
  11. Increase profitability to 15% of net sales by April 2020
  12. Increase sedan utilization to 50% during 2019
  13. Maintain fuel expenses at $100,000 for the year

Specific – Make sure your goals are specific. Define what it is the company would like to achieve. Goal number 1 is very vague. What does this mean? Is the goal to increase cash? Increase the dollar amount of net income? One would have to guess or ask additional questions to really know. Goal number 2 is more specific than goal number 1, but numbers 6 through 13 are much more specific.

Measurable – Make sure your goal has an appropriate metric that can be measured. Sometimes goals are measured in dollars. Some may best be measured as a percentage of sales. Still others, as in examples 9 and 12, are measured by non-financial metrics such as utilization and yield. Creating a productive staff is vague, but decreasing absenteeism by X% over last year is a metric that can be measured.

Attainable – Are you setting goals that are reachable? If the goal is set too high and there is no way to reach it, it is not reasonable to set it as a goal. Goal number 13 may be an unattainable goal. Fuel is a large variable cost that rarely remains stagnant as a company’s revenues eb and flow. Therefore, measure the cost of fuel as a percentage of net sales instead of a dollar amount. During a period of increasing fuel prices, raising your rates may be the action required to attain a consistent fuel cost percentage. Our goal becomes “keeping our fuel cost at a X% of net sales by increasing our rates X% over the next six months.” Understand that here we are looking at rates and not volume. You may increase rates and decrease your utilization, all in keeping with the same bottom line. The point is that an attainable goal can involve multiple action items and results.

Relevant – Is the goal you are setting relevant to your overall business plan? A goal can be set for office supply expense, but that does that really have a significant effect on the company? Make sure the goal is worthwhile. Do not waste time on goals that have little to no affect on your finances, company culture, or personal well-being.

Time Bound – Set a specific time that the goal is to be completed in. A goal without a time frame in which to complete it leaves a company floundering as to the planning steps necessary to get there and hard to determine when you had reached or failed to reach your goal.

Include your team and have them buy into the goal. Allow you supervisors a chance to create goals with you. If you pass the responsibility on to a supervisor, be sure the goal is clear and well understood, and that you provide support. How do they benefit from achieving the goal? Can you incentivize them? How does your line staff benefit? Many times they are the ones that will determine the success of your goal.

Finally, seek encouragement from your non-competing industry peers; friends wish you to succeed and the synergy can be tremendous! In any event, there is always room for improvement and SMART goals are just that, smart.

Let us at BUSBooks review your financial picture and help you set your own SMART goals. Together we can move you further down the road!

Written by Tracy Fickett, CPA and Peter Shelbo, Veteran Bus Operator

BUSBooks is a unique CPA accounting firm dedicated to the motorcoach industry.