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Understanding the BOI Filing with FinCEN and Its Impact on Wineries & Restaurants
In the world of business compliance, staying on top of new regulatory requirements is essential. One such requirement that has garnered attention is the Beneficial Ownership Information (BOI) filing with the Financial Crimes Enforcement Network (FinCEN). As a business owner, understanding and adhering to this requirement is crucial to avoid potential penalties and ensure compliance with federal regulations.
What is BOI Filing?
The BOI filing is part of the Corporate Transparency Act(CTA), a law designed to combat money laundering, terrorist financing, and other illicit activities by increasing transparency in business ownership. Essentially, the law requires certain businesses to disclose information about their beneficial owners to FinCEN, a bureau of the U.S. Department of the Treasury.
A beneficial owner is any individual who directly or indirectly owns or controls at least 25% of a company's ownership interests or exercises substantial control over the company. This includes not only individuals who hold a stake in the company but also those who have significant influence over its operations, decisions, or finances.
Who Needs to File?
The BOI filing requirement applies to a wide range of businesses, including corporations, limited liability companies (LLCs), and other entities created by filing a document with a secretary of state or similar office.
However, not all businesses are required to file. Exemptions exist for certain types of entities, such as publicly traded companies, regulated financial institutions, and larger entities with more than 20full-time employees and over $5 million in gross receipts. Most small businesses, including family-owned wineries, vineyards, and farm operations, will likely need to comply with this requirement.
The BOI Filing Process
The BOI filing process involves submitting a report to FinCEN that includes specific information about the business’s beneficial owners. This information typically includes:
- Full legal name
- Date of birth
- Residential address
- A unique identifying number from an acceptable identification document (such as a passport or driver's license)
This means that if your winery or vineyard has multiple owners, or if other individuals hold significant control, you’ll need to gather and report this information for each individual.
How This Applies to your Business
- Wineries and Vineyards: Many wineries and vineyards are small, family-owned businesses with multiple stakeholders. Even if the ownership is divided among family members, these individuals still need to be reported under the BOI filing. Additionally, if your business has external investors or partners, their information will also need to be included.
- Tasting Rooms and Restaurants: For businesses that operate tasting rooms or associated restaurants, it’s important to remember that if these establishments are structured as separate legal entities, they may also be subject to the BOI filing requirement. Even if the tasting room is an extension of the winery, if it operates under a different legal structure, it will need to comply separately.
- Farm Businesses: Family farms, particularly those involved in direct-to-consumer sales or agritourism, often operate as LLCs or other corporate structures. These businesses will also need to comply with BOI filing if they meet the criteria for reporting.
Deadlines and Penalties
The Corporate Transparency Act sets strict deadlines for compliance. Businesses that were in existence before January 1, 2024 will have until January 1, 2025 to file their BOI reports. Businesses formed in 2024 are required to file within 90 days of formation, while companies created on or after January 1, 2025, must file within 30 days. Failure to file can result in a penalty of up to $500 per day, adjusted for inflation (which is $591 as of October 2024). Willful violations can lead to criminal penalties, including fines or imprisonment.
Steps to Take Now
- Identify Beneficial Owners: Review your business’s ownership structure to determine who qualifies as a beneficial owner. This includes not only those who own 25% or more of the business but also individuals who exert significant control. If owners are living in a community property state, additional rules may apply.
- Gather Necessary Information: Collect the required information for each beneficial owner, including legal names, addresses, dates of birth, and identification numbers.
- File BOI Report: Filing is done through FinCEN’s online portal. Your company will need to create an account to submit the report.
- Stay Informed: Keep an eye on FinCEN’s updates and guidance regarding the BOI filing process to ensure you’re up to date on any changes or clarifications.
- Seek Professional Assistance: If you’re unsure about how to comply with the BOI filing requirements, consider consulting with a legal or accounting professional who understands the specific needs of your industry.
Meeting the BOI filing requirement may seem like just another administrative task, but it’s essential for keeping your business in good legal standing. By completing it accurately and on time, you can stay focused on what truly drives your business—whether it’s the vineyard, the cellar, or the kitchen.
