What Every CPA Firm Should Know About BOI Reporting

Beneficial Ownership Information (BOI) is the newest regulation to impact small businesses and the trusted advisors they turn to for help. This anti-money laundering measure administered by FinCEN (Financial Crimes Enforcement Network) is designed to enhance transparency in corporate ownership structures.

To assist CPA firms as they try to figure out their role in BOI reporting, we hosted a webinar with representatives from the AICPA. Lisa Simpson, vice president of firm services, and Melanie Lawson, vice president of the tax policy and advocacy team in Washington, DC, helped demystify BOI reporting, discussed liability concerns and offered practical strategies for CPAs.

BOI reporting has significant implications for accounting firms, presenting both challenges and opportunities. Firms that proactively address compliance issues and offer BOI-related services stand to differentiate themselves in the marketplace and attract clients seeking expertise in this area, but you first need to understand the risks.

What is BOI Reporting

It’s a requirement for entities to disclose the individuals who ultimately own or control them. Beneficial owners are individuals with at least 25% ownership or those exercising substantial control over an entity.

Reporting for existing businesses started Jan. 1, 2024, and any changes or updates to beneficial owner information must be reported within 30 days of the change. The reporting rules are intricate, with different deadlines for existing and newly formed entities. While there are exemptions for 23 types of entities including certain large entities, there are still about 32 million businesses that will need to comply. Some of the required reporting information includes an address as well as information on a driver’s license or passport, posing challenges for compliance when this information changes.

The information submitted for FinCEN is vital for combating financial crimes such as money laundering and terrorist financing. Similar regulations have been implemented in the EU and Canada, signifying a global trend toward transparency.

Should Accountants Help with BOI Reporting?

Business owners can file BOI forms themselves, but it is uncertain if they will. The small businesses that will likely have to comply often turn to their accountants for help. Most don’t even have an attorney relationship. This means CPAs will likely play a pivotal role in ensuring compliance with BOI regulations.

Minimally, all firms should make it a priority to raise awareness of these reporting requirements as a risk mitigation step. Share it in newsletters, in email messages and on your website. Also, let clients know that scammers are out there so they need to stay alert. Retain a copy of messages sent along with a distribution list to show that you reached out to inform them.

If a client asks if they should report, you’ll want to have a point person on your team who can provide an answer to help mitigate risk. Don’t rely on off-the-cuff responses since failure to accurately report beneficial ownership information can lead to severe consequences, including up to $10,000 and two years of jail time.

Deciding whether or not to offer BOI services will likely come down to a firm’s risk tolerance. Firms that decide to offer this service must decide what services they will provide and at what level. For example, it is initial reporting only or will it also be corrected reports? In addition, CPAs need to be aware of the professional liability risks inherent in BOI reporting. This includes errors and omissions in reporting, as well as potential lawsuits from clients or regulatory authorities for non-compliance.

Firms that choose not to provide BOI services should document in existing engagement letters that BOI services are out of scope and the client has sole responsibility for compliance. Sample language can be found in the AICPA Member Insurance Programs’ risk alert on

Navigating Corporate Transparency Act/Beneficial Ownership Reporting.

Managing Risk

To provide BOI services effectively while mitigating risks, CPAs should implement practical strategies such as conducting thorough due diligence on clients, maintaining up-to-date knowledge of regulatory requirements, and leveraging the technology solutions that are being developed for data management and reporting. You also want to maintain thorough documentation of conversations with clients.

Utilizing engagement letters is essential for clarifying the scope of services related to BOI reporting and establishing expectations. Lawson advises using a separate and narrowly defined engagement letter containing the exact scope of the BOI work. It should also state that it’s the client’s responsibility to notify the CPA of changes to ownership so timely updates can be filed. Clear communication and documentation around the scope of services, responsibilities and potential liabilities are key.

CPAs should also carefully review their insurance coverage to understand what is covered and what is not regarding BOI reporting. Companies like CNA and Cameco generally cover BOI services, but exclusions may apply in cases involving fraud or illegal activities. Lawson urged firms to consult their insurance carriers to ascertain coverage specifics as acceptance of BOI services within the insurance framework is evolving.

There has been a lot of discussion around whether or not providing BOI services would be an unauthorized practice of law (UPL). This is determined at the state level, and no state has universally said it is UPL. Most BOI reporting tasks do not necessitate legal analysis, though legal consultation is advisable for complex cases. For those concerned with retroactive UPL determinations, CNA says that insurance coverage remains valid for services rendered within the policy period. That’s another question for your insurance provider.

Stay Informed

Right now, regulatory requirements for reporting are constantly evolving. CPAs must stay proactive in keeping up with these changes and adjusting their practices accordingly to ensure compliance and minimize exposure to risks.

Lawson advises firms to stay abreast of evolving regulatory guidance from FinCEN and seek legal counsel when necessary to ensure compliance. Check out FinCEN’s Beneficial Ownership Information website for the most up-to-date information and the AICPA’s Beneficial Ownership Information (BOI) Reporting resource center for additional guidance for CPAs. Additional updates will also be provided on the future AICPA Town Hall sessions as they become available.

BOI Presents New Complexities to Navigate

CPAs are positioned to play a pivotal role in assisting clients with BOI reporting, given their expertise in financial matters. Doing so will require firms to take a proactive approach, make meticulous documentation and commit to ongoing education. However, there are a lot of factors firms are considering when making this determination.

As you decide on your firm’s role in BOI reporting, you’re encouraged to listen to this Beneficial Ownership Information Reporting Update webinar – there is advice for those who go down this path and those who don’t. Learn what you need to do to mitigate potential risk and better serve your clients.