Essential Steps For Small Business Owners Ahead of the BOI Reporting Deadline
by Mark j. O'Donnell and Jim Schmersahl
Many businesses are now required to comply with the Corporate Transparency Act and reveal certain information about individuals who, directly or indirectly, exercise substantial control over the company. This new Beneficial Ownership Information (BOI) reporting requirement requires businesses to file a report with the Financial Crimes Enforcement Network (FinCEN), which uses the information to combat money laundering. There are several actions you can take to prepare for the upcoming filing deadline and ensure your business complies with the new regulations.
Who Must File
Corporations, limited liability companies (LLCs), and similar entities created in or registered to do business in the United States may be required to report BOI. However, twenty-three entity types may be exempt from this requirement, including large companies (> 20 employees and >$5M of sales) with a physical presence and substantial operating history, tax-exempt entities, and inactive entities in existence before January 1, 2020. The criteria for an exemption are numerous; please refer to FinCEN’s Small Business Compliance Guide (https:// www.fincen.gov/boi/small-entity-compliance-guide) for more information. If you’re unsure of your entity classification or whether you meet an exception to filing, consider consulting your CPA or corporate attorney.
Required Information
Once you’ve established that your business needs to file a BOI report, it’s time to collect the necessary information. You must provide:
- Legal name of your business.
- Primary location your business operates, which may differ from your registered address.
- Entity Employer Identification Number (EIN) or Social Security Number (SSN).
- Beneficial Owners’ Information: full name, date of birth, residential address, and a unique identifying number from an acceptable form of identification (e.g., driver’s license or passport). Plan to scan their identification document.
- Company Applicant’s Information: New entities filing within the 90 calendar day window must provide similar information for the individual who filed the document to create the entity.
How to File
File the BOI report electronically through FinCEN’s secure online system (https://boiefiling.fincen.gov/fileboir). Familiarize yourself with this platform to ensure a smooth filing process. If you encounter difficulties or have questions about the system, consider contacting FinCEN or a professional with BOI filing experience. Additionally, ensure all information is accurate and complete before submitting your report. Inaccuracies can lead to delays or additional regulatory scrutiny.
Filing Deadline
Review the deadlines associated with BOI reporting as there are different due dates depending on when your business was established. Meeting your deadline avoids last-minute stress and potential penalties for late submission.
If your business was formed before January 1, 2024, you must file your initial report by January 1, 2025.
Entities created in 2024 have 90 calendar days to file their initial report. Starting in 2025, the new entity filing window shrinks to just 30 calendar days.
Certain changes to the initial report must be reported within 30 calendar days.
Non-Compliance
Failure to timely file an initial or updated BOI report can lead to significant penalties. Civil penalties may be up to $591 each day the report is late.
Additionally, willful violations may result in criminal penalties, including fines of up to $10,000 and incarceration. Both individuals and corporate entities can be held liable for these violations, emphasizing the importance of timely and accurate reporting. This underscores the necessity of taking compliance seriously and acting promptly.
Professional Guidance
Seek advice to ensure compliance with BOI regulations, especially if your business structure is unique or has multiple beneficial owners. Your CPA or corporate attorney can clarify any applicable exemptions and guide you through this complex reporting process.
The upcoming BOI reporting deadline may seem daunting; start now to ensure compliance and avoid potential pitfalls. By determining your reporting requirements, consulting professional counsel, and gathering necessary information, you’ll be well-equipped to successfully navigate this new regulatory landscape.
Mark O’Donnell, CPA, is Partner at Schmersahl Treloar & Co. He can be reached at 314.966.2727. Jim Schmersahl, CPA, is a Partner at Schmersahl Treloar & Co. He can be reached at 314.966.2727.