2024 was the year when life got different for companies in the State of Michigan, among others across the U.S., with the Corporate Transparency Act. One major feature of the CTA was the requirement for BOI Reporting with the FinCEN. Every business owner operating a business in Michigan should be conversant with the BOI reporting requirements, the process for filing, and potential penalties against them for non-compliance.
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What is BOI Reporting?
BOI reporting means filing detailed information with FinCEN regarding the company’s beneficial owners. The term “beneficial owner” is defined as any person who exercises substantial control over or owns 25% or more of a business entity. The process aims to minimise instances of financial crimes like money laundering, fraud, and tax evasion by providing greater corporate transparency.
BOI Reporting Requirements for Michigan Companies
Michigan businesses have a new reporting requirement with the BOI under the Corporate Transparency Act. Here’s what you need to know:
Who Needs to File a BOI Report?
Other than a few exceptions, the BOI report in Michigan is required to be filed with most companies registered here, including LLCs, corporations, and limited partnerships. In general, this BOI report from LLCs and other business entities will have information related to the beneficial owners of the company and people with substantial control of the business.
Information to Include in Your BOI Filing
When filing a BOI report, Michigan companies must provide:
- Full legal name of each beneficial owner
- Date of birth
- Residential address
- Unique identifying number (such as a driver’s license or passport number)
Of course, all of the above information must be complete and up to date. If for any reason any of it changes, you are obligated to report the change within 30 days to remain compliant with FinCEN’s rules and regulations.
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BOI Reporting Deadline for Michigan Companies
How much time you have to file your initial BOI is based on your date of formation:
For New Companies: The companies formed on or after January 1, 2024, shall file the BOI report within 30 days of registration.
For Existing Companies: All the companies which were registered before January 1, 2024, shall file the first BOI report until January 1, 2025.
Failure to meet this deadline for the BOI filing may lead to grave consequences, such as imposition of fines and possible legal complications, among others.
Corporate Transparency Act 2024 and its Penalties
The Corporate Transparency Act of 2024 was enacted in an effort to deter illegal financial dealings by forcing transparency upon business ownership. It puts certain requirements on the reporting companies for filing beneficial ownership information with FinCEN. The intent behind the requirement for reporting is to build a federal database to trace and help law enforcement agencies deter financial crimes.
Non-compliance with the BOI reporting requirements under the CTA may attract severe penalties. Failure by any business to file BOI reports or filing false information subjects the business to the following:
- Monetary Fines: Businesses can be fined up to $500 per day of non-compliance.
- Criminal Charges: Wilful violations may constitute criminal charges, with imprisonment not to exceed two years.
These penalties underline the importance of understanding and maintaining compliance with the requirements of BOI filing.
How to File a BOI Report for Michigan Companies
Companies in Michigan are required to file their BOI report online through the FinCEN online portal. Of course, the filing process is relatively simple, but it does require thorough and accurate information about each beneficial owner. Here is a quick overview:
- Create a FinCEN Account: Register your business on the FinCEN website.
- Prepare Your Documents: Gather necessary identification documents for each beneficial owner.
- Complete the BOI Filing Form: Enter all required information carefully to avoid errors.
- Submit the Report: Review the form and submit it through the FinCEN portal.
It’s advisable to keep a copy of the submission for your records.
Beneficial Ownership Information Reporting for Michigan Companies
Other than for a few exceptions, BOIR filing has been imposed on most Michigan businesses. The whole point of such reporting is transparency as to who owns or controls an organisation in order to reduce risks of shell companies used for illicit purposes. Because of this, many businesses based in Michigan have to follow the rules of such filing to avoid penalties and to make sure their operation is transparent and legal.
Conclusion
BOI reporting has to be on time for precision and correctness towards legal compliance, with no penalties involved. In essence, a Michigan business needs to understand what the BOI reporting requirements are to move with the times in this new regulatory space. If you have any questions or would like to request assistance concerning your BOIR filing, feel free to consult with one for full compliance towards the Corporate Transparency Act.