Small Business Owner? Get clear on who’s going to handle a new BOI required filing for 2024
Thanks to the Corporate Transparency Act of 2021, business owners need to file Beneficial Ownership Information (BOI) Reports starting January 1, 2024. Failure to comply with this requirement could result in fines of up to $591/day or even jail time – thanks to final rules recently published by the Financial Crimes Enforcement Network (FinCEN).
A beneficial owner is an individual who either directly or indirectly exercises substantial control over the company, or owns or controls at least 25% of the reporting company’s ownership interests.
These BOI Reports must be e-filed before the end of the year 2024 and the regulation generally applies to anyone with a business entity that was created by filing with their secretary of state. Even small businesses formed as corporations, or single member LLCs fit this definition (fortunately sole proprietors do not). There are 23 exceptions to the rules that exempt certain businesses like Banks, Accounting firms, and Investment companies from the filing, but a huge number of small businesses will be impacted.
It is possible to file the BOI reports yourself, but if you’re a busy entrepreneur, this may be a daunting task. The small entity compliance guide is a 57-page PDF, and the FAQs are 38 pages long. You may refer to the FINCEN site for these documents and additional information.
Some CPA firms and attorneys may incorporate the BOI Report filing into the work they are already doing for you, but many are still deciding whether or not they will offer this as a service. When you get your taxes done this year, ask if your tax preparer will do it. Be sure to also ask about routine updates as well. Any interpretive advice may dip into the realm of legal services, so your CPA may tell you that you need to talk to your attorney.
This report may slip through the cracks. Be sure to bring this up with your tax and legal advisors in the next few months so you’re not part of the inevitable stampede of people trying to get this filed in December.
Sources
Waggoner, Martha. (25 January, 2024). AICPA Journal of Accountancy. BOI reporting and unauthorized disclosure penalties increased.https://www.journalofaccountancy.com/news/2024/jan/boi-reporting-and-unauthorized-disclosure-penalties-increased.html
Financial Crimes Enforcement Network. Beneficial Ownership Information.
Chris Jaccard, CFP®, CFA is a lead advisor with Financial Alternatives in La Jolla, CA. When he’s not working on home improvement projects or trying to keep up with his kids, he loves to help successful families consider their alternatives and make better financial choices with the EXPERT™ Advisory Process. Schedule a time to chat about your situation or the latest project.