If you run a S-corp, LLC or PLLC, you need to know what a Beneficial Ownership Information Report (BOIR) is.
UPDATE, DECEMBER 2024: due to ongoing litigation, BOIR completion is currently considered optional by FinCen, which cannot enforce the requirement while the case is underway. If you have not completed your BOIR already, I recommend keeping an eye on this to ensure compliance if/when it does become a requirement again, as potential fines are high. Read more about the changes HERE.
In the words of the Financial Crimes Enforcement Network (FinCEN), Beneficial Ownership Information (BOI) “refers to identifying information about the individuals who directly or indirectly own or control a company”.
“In 2021, Congress passed the Corporate Transparency Act on a bipartisan basis. This law creates a new beneficial ownership information reporting requirement as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.” ~ FinCEN
In more casual terms, the purpose of a Beneficial Ownership Information Report (BOIR) is to improve transparency on ownership, and minimize the ability for business entities to be used as a shield for illegal activity.
You can find the full FinCEN FAQ here.
Keep in mind that while a single-member LLC is treated as a sole proprietorship for tax purposes, an LLC is a separate legal entity whereas a true sole proprietorship is not necessarily. So while a true sole proprietorship may be exempt from filing requirements, an LLC is not. Learn more about the difference here.
Privacy, exemptions, time, and fees
There have been several concerns regarding the Corporate Transparency Act and BOIR requirements. In fact, earlier in 2024 in Alabama, National Small Business United v. Yellen addressed whether the act is even constitutional (you can read more about this here). While there are concerns about the act which may change things in the future, currently, completion of a BOIR for applicable companies is a federal requirement.
Let’s discuss a couple of points.
- Privacy – the BOIR is private, accessible only to agencies like law enforcement, the IRS, and banks and will not be publicly disclosed. Concerns about privacy and safety are understandable, but when you consider the amount of information about any of us that can be readily found on the internet…the information disclosed in filing almost irrelevant.
- Exemptions – there are a list of 23 exemptions to filing requirements, which can be found here.
- Time – luckily, it takes only a couple of minutes to file your BOIR online. If you are both owner and reporting agent, you may have to input your information twice. Otherwise, it’s fairly quick and straightforward.
- Fees – there is no fee to file the BOIR, but there is a hefty fine for willful noncompliance. Be sure that your non-exempt company has filed the BOIR in accordance with the information from FinCEN below.
- A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025, to file its initial BOI report.
- A reporting company created or registered in 2024 will have 90 calendar days to file after receiving actual or public notice that its creation or registration is effective.
- A reporting company created or registered on or after January 1, 2025, will have 30 calendar days to file after receiving actual or public notice that its creation or registration is effective. ~ FinCEN
Unless you already work with a professional to handle your business filings, there is no reason to do so now. A Google search for BOIR filing information turns up any number of paid services which will file a simple BOIR for you – this is not necessary. The average business owner will not have an issue filing for themselves.
File your BOI report here.
If you haven’t yet, be sure to visit the Financial Crimes Enforcement Network (FinCEN) website for the FAQ, and click the headline above for the 2 online filing options.
“Hey Ilana – why are you writing about this? Isn’t it the government’s job to get this out there?”
Yes, it is. And according to FinCEN, they are actively engaged in doing so:
“FinCEN is engaged in a robust outreach and education campaign to raise awareness of and help reporting companies understand the new reporting requirements. That campaign involves virtual and in-person outreach events and comprehensive guidance in a variety of formats and languages, including multimedia content and the Small Entity Compliance Guide, as well as new channels of communication, including social media platforms. FinCEN is also engaging with governmental offices at the federal and state levels, small business and trade associations, and interest groups.”
With that said, word seems to be getting around within professional networks and organizations, but for the smallest of small businesses (which I primarily work with), that’s not a world they play in. The sole practitioner just starting a PLLC or the parent of young children operating a small business alongside their other responsibilities is a lot less likely to be immersed in the business world. And that’s why I’m sharing. The same way I’d appreciate someone looking out for me, I want to look out for you.
If you’re just starting out and are looking to create an LLC from scratch, but don’t know where to start, I have a resource for you. No, you don’t need to spend hundreds on online legal services to file. If you’re in New York State, I’ve written up a step-by-step instruction guide (available for $3.99) that will make sure you cover all your bases. Find it here.
As a disclaimer, I am not a lawyer, an accountant, or any sort of business specialist. Please do your due diligence in investigating your reporting requirements.
Thank you for reading! Please share this post if you think it will be helpful to your small business buddies, and feel free to contact me with thoughts or to discuss working together.