The US Corporate Transparency Act was primarily introduced to help tackle illicit activities by increasing the transparency of company ownership structures. Accuracy is everything while filing FinCEN BOI, as errors could lead to regulatory issues, fines, and sometimes even legal action. From missed deadlines to inaccurate data, these errors result in compliance issues and related penalties. If a report is filed inaccurately, the reporting company is required to file a corrected report within 30 calendar days after becoming aware of the inaccuracy or has reason to know of the inaccuracy.
Starting the Beneficial Ownership Information Report, business owners may find FinCEN BOI system errors. Additionally, the online form can be confusing, especially for those not familiar with the complex rules regarding BOI registration. Let’s discuss the top BOI Reporting Errors and how you can avoid them.
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Incorrect Identification of the Beneficial Owner
It is one of the most common errors involving misidentification of the beneficial owner. A compliance report from 2022 indicates that 30% of BOI filings contain errors in the information related to its beneficial owners.
How to Avoid:
- Check personal the information twice before submitting the report.
- Use Tax1099’s request info. Feature to extract the details directly from the beneficial owner.
- Take advantage of reliable tools for verification of identity.
- Update the records regularly.
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Missing Beneficial Owners
Another common mistake is the failure to disclose all beneficial owners. Based on a study by FinCEN in 2021, 20% of BOI reports did not identify all the beneficial owners, creating huge compliance issues.
How to avoid:
- Fully examine the current ownership structures.
- Include all the individuals who qualify as owners.
- Verify with counsel for compliance with applicable law.
3. Inaccurate Ownership Percentages
Errors in reporting the percentage of ownership or control held by beneficial owners.
How to avoid:
- Ensure you fully understand FinCEN’s criteria for beneficial ownership. Typically, a beneficial owner is an individual who directly or indirectly owns 25% or more of the equity interests of the entity or exercises significant control over it.
- Ensure each beneficial owner’s percentage of ownership is correctly calculated and documented.
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Inconsistent Information
Inconsistency of information in various documents and reports is a red flag. Inconsistencies may call for further review. Many times, regulatory bodies cross-check information.
How to avoid:
- Keep a centralized database of all BOI data.
- Every report and document should show the exact same information
- Regular auditing and reconciliation of data.
5. Insufficient Supporting Document
Incomplete or missing supporting documentation could render your BOI report null and void. Proper documentation is necessary for verification and compliance.
How to Avoid:
- Keep complete records of all beneficial owners.
- Store supporting documents in a safe and accessible location.
- Review regularly the requirements for documentation and ensure compliance.
Conclusion:
Ensuring compliance and adherence to the law cannot be compromised. Reports must be submitted on time with the accurate data to maintain transparency and meet regulatory requirements set by FinCEN. Common errors, such as incomplete information, misclassification, and inaccurate ownership percentages, can lead to significant penalties and complicate compliance efforts.
To avoid these pitfalls, it’s essential to understand the criteria for beneficial ownership, gather precise information, use reliable tools and platforms like Tax1099, maintain detailed records, and consult with professionals when necessary. By implementing these best practices, businesses can streamline their BOI reporting process, reduce errors, and ensure they remain compliant with FinCEN regulations.
File Error-Free BOI Reports with Tax1099
Tax1099 is a powerful tool that can help you file error-free BOI reports with ease. It provides users with an intuitive platform that’s user friendly and easy to navigate. It provides detailed reporting features and an audit trail that records all changes made to your BOI reports. This transparency helps you track updates, understand the filing process, and maintain accurate records for future reference. Moreover, if you encounter any issues or have questions while filing your BOI reports, our expert support.