The BOI reporting deadline is fast approaching, and with it comes an important question for small business owners across the U.S.: Does my business need to file a report?
The short answer is many U.S. businesses will need to report Beneficial Ownership Information (BOI) to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) by January 1, 2025. This requirement, born from the Corporate Transparency Act (CTA), aims to increase corporate transparency and crack down on illicit financial activities like money laundering and fraud. The potential penalties for non-compliance are steep, meaning businesses can’t afford to overlook this obligation.
This guide breaks down everything you need to know about BOI reporting: what it is, who it applies to, and how you can ensure compliance.
What is BOI Reporting?
BOI reporting is a new requirement under the Corporate Transparency Act (CTA). It mandates that many businesses must submit information about their beneficial owners—the individuals who ultimately own or control the business—to FinCEN.
The goal? To deter criminal organizations from using businesses as vehicles for illegal activities. By revealing who stands behind a business, authorities can uncover and prevent money laundering, terrorist financing, and other financial crimes.
A Quick Legal Update
There is ongoing litigation questioning the constitutionality of the CTA, and some members of Congress have called for delayed deadlines. However, it’s critical that businesses act now rather than wait. The penalties for missing the reporting deadline are significant, and expecting regulatory changes is risky.
Which Businesses Must Comply?
The CTA casts a wide net. Most corporations, limited liability companies (LLCs), partnerships, and other legal entities created through state filings are required to report. However, there are exemptions for certain businesses, including large operating companies that meet specific criteria.
Key Exemptions
Large operating companies are exempt if they meet all the following criteria:
- Employ more than 20 full-time employees.
- Generate more than $5 million in gross receipts or sales (excluding sales from foreign sources).
- Have a physical office in the United States.
These companies are often already subject to other reporting requirements that collect comparable information.
For small businesses, the absence of this exemption means they need to assess and act quickly to ensure compliance.
Who Counts as a Beneficial Owner?
Under the CTA, a beneficial owner is generally any individual who:
- Owns or controls at least 25% of the company’s ownership interests.
- Exercises substantial control over the company.
This includes directors, executives, and major shareholders.
What Happens if You Don’t Comply?
Penalties for failing to file a BOI report on time can be severe.
Civil Penalties
Non-compliance can result in civil fines of up to $591 per dayper day** for every day the violation continues (this amount adjusts annually for inflation). Even short delays can add up quickly.
Criminal Penalties
Willful neglect of BOI filing requirements could lead to criminal penalties, including:
- Fines up to $10,000.
- Up to two years of imprisonment.
Violations include failing to file, submitting false information, or not updating previously submitted details.
The stakes couldn’t be higher, and with the compliance deadline drawing near, it’s critical for businesses to act promptly.
Deadlines for BOI Compliance
The deadline to file your BOI report depends on your business’s date of formation or registration.
- Entities created before January 1, 2024 must file their reports by January 1, 2025.
- Entities created on or after January 1, 2024 must file within 90 days of receiving their creation or registration documents.
- For entities formed on or after January 1, 2025, this period shortens to 30 days.
Extensions for Certain Businesses
FinCEN has already announced deadline extensions for entities affected by recent hurricanes. If your business has been impacted by natural disasters, contact FinCEN to see if extensions apply.
How to File Your BOI Report
Submitting your BOI report involves gathering and submitting details about your business and beneficial owners. Here’s what you’ll need to include:
- Business Information
- Name, address, and state of incorporation.
- Employer Identification Number (EIN).
- Beneficial Owner Information
- Full legal name, date of birth, and address.
- A unique identifying number, such as a driver’s license or passport number.
Reports can be filed electronically through FinCEN’s secure online portal.
Beware of Scams Targeting BOI Filers
Unfortunately, scammers are exploiting BOI reporting requirements to target business owners. FinCEN has issued warnings about fraudulent messages referencing bogus forms (like “Form 4022”) or fake agencies (such as the “U.S. Business Regulations Dept.”).
Red Flags to Watch For
- Emails or messages requesting payment for filing assistance.
- Threats of penalties if you don’t respond immediately.
- Suspicious URLs or QR codes claiming to provide forms or information.
Always verify correspondence that claims to be from regulatory bodies. If you’re unsure, consult FinCEN’s official website or a trusted financial advisor.
Why Acting Now Matters
While litigation and congressional debates might seem like reasons to wait, penalties for missing the January 1, 2025, deadline are far too high. Ensuring compliance now will save your business from potential fines, jail time, and reputational risk later.
Small businesses represent the heartbeat of innovation, and compliance with BOI requirements is critical to maintaining the trust of consumers and regulators alike.
Need Help Navigating BOI Compliance?
If BOI reporting feels overwhelming, you’re not alone. At SD Mayer & Associates, we specialize in simplifying complex financial rules and regulations for small businesses like yours.
Our team of compliance experts can help you determine whether your business needs to file, gather the necessary details, and submit your BOI report before the deadline—all while ensuring complete accuracy and peace of mind.
Schedule a free consultation today and take the first step toward securing your business’s compliance and future success.
DISCLAIMER:
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. The services of an appropriate professional should be sought regarding your individual situation.
