Lots of small business owners might not know this, but the federal government is requiring you to file some new documentation this year. Anyone who owns a small business with a legal entity, like a limited liability corporation (LLC) should pay attention to this new rule. Just like filing taxes, if you don’t do it, the consequences are severe. You cannot afford to miss this deadline.
The U.S. Department of the Treasury has started a brand new reporting requirement in 2024 for small business owners called Beneficial Ownership Information (BOI) Reporting, or “BOI Reporting.” The goal of this new rule is to fight financial crime, and help the feds prevent drug cartels or foreign oligarchs from using the U.S. financial system for money laundering or terrorism.
The new BOI Reporting requirement is complicated, and it was not clearly communicated or widely announced; I only happened to find out about it because of a news headline and a monthly newsletter from my state’s Secretary of State office. So in case this is the first time you’ve heard about BOI Reporting, don’t worry — you still have time to get it done.
Let’s look at what the BOI Reporting requirement is about, how it works, and how long it takes.
What is the BOI Reporting requirement?
BOI Reporting is a result of the Corporate Transparency Act. The U.S. government is trying to make it harder for criminals and bad actors to set up shell companies in America, and then use those phony companies to launder money or get access to the U.S. banking system. Just like banks have to file reports about suspiciously large deposits of cash to stop money laundering, the U.S. Treasury Department wants to prevent suspicious LLCs and other legal business entities from being used for financial crimes.
As a result, many small businesses in the U.S. are being asked to file a new document that shows exactly who benefits from their business entity (such as an LLC or S Corp). The federal government wants to make sure your business is really owned by a “real person” or a legitimate group of owners, not by a tangled web of shadowy crime lords. If you own an LLC, S Corp, or other legal business entity that was created or formed at the state level, you probably need to do BOI Reporting.
Keep in mind that BOI Reporting is a new federal requirement in 2024. This is different from your usual state-level annual report or biannual report that you have to file with state authorities. Don’t delay, ignore, or forget about this new requirement!
How to file BOI Reporting
No one ever looks forward to filing taxes or dealing with government bureaucracy, but this BOI requirement is crucially important. Fortunately, it’s fast and easy. It only took me five minutes to fill out the BOI forms for my small business.
Here’s how to get it done:
- Go to the Financial Crimes Enforcement Network (FinCEN) website at https://fincen.gov/boi
- Read the BOI Reporting FAQs to make sure you understand the rules for your business. Some types of small businesses and nonprofits are exempt from BOI Reporting, but don’t assume that you’re exempt — you probably need to do BOI Reporting.
- Use the BOI E-Filing System to file your BOI Report.
If you own an LLC and have a simple ownership structure, you’ll just need a few pieces of information to file your BOI report. For example, when I filed my BOI Report, the system asked me for details, including:
- Company name
- Company tax identification number (Employer ID Number)
- Company address
- Beneficial owner’s name and address
- Identifying document (like a driver’s license or passport)
It only took me about five to 10 minutes to fill out the information and complete the process of the BOI E-Filing System. And BOI Reporting doesn’t cost any money; there are no fees. This is much easier than filing taxes!
What are BOI Reporting deadlines?
BOI Reporting deadlines depend on when your business entity was formed. If you own a small business that already was created or registered to do business prior to Jan. 1, 2024, your BOI Reporting deadline is Jan. 1, 2025.
If you start a new business in 2024, your BOI Reporting deadline will be within 90 days after the company’s creation or registration. The deadline will be even shorter (just 30 days) for new businesses formed in 2025.
Bottom line
BOI Reporting is a new rule in 2024 that small business owners need to follow. Do not ignore this, forget about it, or think it doesn’t apply to you. Most small business owners, unless their companies fit into a few exempt categories, are probably required to file a BOI Report in 2024.
Just like failing to file your taxes, not filing BOI Reports can bring big financial penalties and even send you to prison. Small business owners can help fight financial crime by sharing a few pieces of information with the U.S. Department of the Treasury. File your BOI Report in 2024!
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