Are you a remote business owner, digital nomad, or RV entrepreneur? Well, then you may have heard the latest buzz in the business world. It’s all about the new Beneficial Ownership Information (BOI) reporting.
Let’s dive into the details so you understand what this new regulation means for you and your business.
BOI Reporting
This is a brand new requirement for business owners and it was part of the Corporate Transparency Act passed in 2021. It’s not a tax thing. It’s essentially about bringing to light the individuals or entities that hold significant sway in the decision-making processes of a business.
The government claims reporting business ownership information will make it harder for bad actors to hide or benefit from shell companies or other opaque ownership structures. Unfortunately, it’s another task you must do when you own a business.
There’s no way around it. You must do this or risk high fines and jail time!
The ABCs of BOI Reporting
BOI Reporting is enforced by the Financial Crimes Enforcement Network (better known as FinCEN). A failure to comply can result in a company and the individuals responsible for the non-compliance being subject to hefty civil and criminal fines and even possible jail time.
Are you hearing me? This is serious stuff that comes with serious penalties for not complying.
Beneficial owners are the focal point – those entities or individuals pulling the strings behind the scenes.
Yup. The government wants to know who owns what. Whether you agree with this or not, you need to comply.
Generally, this means if you have control over a business or own at least 25% of a company, you must comply with BOI reporting. It’s not a choice here. I’m repeating that you MUST file this or risk substantial fines!
Do you need to file?
If you formed a corporation (S corp or C corp) or a limited liability company (LLC) or officially filed a business with a secretary of state, a BOI report will have to be filed unless your corporation or LLC qualifies for an exemption.
The key is whether you had to file a document with the secretary of state or a similar office to form your company or business. If you’re operating as a sole proprietor with your legal name, then you should be exempt from this new filing requirement.
There are 23 exemptions! That seems like a lot but in general, the exemptions already have tight regulations by the federal and/or state governments. These include, among others, publicly traded companies, financial institutions, insurance companies, tax-exempt organizations, and regulated public utilities. Most small corporations and LLCs will probably not qualify for an exemption but it’s still important to be familiar with all 23 because you’ll want to know for certain whether your company is exempt or not.
How to comply?
The good news is that you have a year to file for the first time. You can comply with BOI reporting any time from January 1, 2024, to January 1, 2025.
Yes. That means you will have a year to file, beginning from January 1st. If you’re a new company starting in 2024, you will only have 90 days after formation to file.
It’s YOUR responsibility to know about the filing and to complete it on time.
Your company’s BOI report will be filed with FinCEN. It will be submitted electronically through a filing system via FinCEN’s website. Please know there is no fee for filing the report and that this is a federal filing. That means there is no state filing requirement.
What information will you need for BOI reporting?
You’ll need to provide FinCEN with the basics about your company. This includes its legal name, any DBA names, address, state of formation, date of formation, and taxpayer identification number (more than likely your EIN or employer identification number).
What’s even more important is that you also need to provide FinCEN with personal information for each beneficial owner. Remember from above this means if you have substantial control over or own at least 25% of a company including an LLC, you’ll need to provide your personal information.
What’s included in this personal information? Your legal name, birthdate, address, a government-issued ID number such as a driver’s license or passport, and an image of said government ID. We already provide much of this information to banks and other financial institutions so it should come as no surprise.
Are you ready for this new requirement? Ask your questions below.