Regulations. Forms. Registrations.
Not the best hook for news of great importance to the entire business community.
How about this? Five hundred dollars a day for non-compliance.
Penalties are steep for the new law under the Corporate Transparency Act (CTA) that requires all corporations (LLCs, S-Corps and C-Corps) to file a Beneficial Ownership Information (BOI) Report with the Financial Crimes Enforcement Network (FinCEN).
All those acronyms add up to an enhanced federal effort to reduce financial crimes related to money laundering and shell companies for many kinds of federal crimes including human trafficking, drug trafficking, illegal arms sales, terrorism funding, etc.
Before you get too concerned, this story has a pretty happy ending. It costs nothing to file and takes just a few minutes to do so.
Almost all small and medium-sized businesses have to file a BOI in 2024. Your business needs to file if you created your company by filing a document with the Secretary of State. This includes partnerships, LLCs, S-Corps and C-Corps. If you started your business before Jan. 1, 2024, you have until Dec. 31, 2024, to file without penalty. However, if you start/started your business after Jan. 1, 2024, you have only 90 days to file before penalties kick in.
A beneficial owner directly or indirectly exercises “substantial control” or directly or indirectly owns or controls 25 percent or more of ownership interests. Some examples: Three members of an LLC, each controlling 33 percent of the interests, would all have to file.
Another example would be a COO of a 12-employee manufacturing corporation and any other C-suite employees.
There are 23 filing exceptions at time of writing. Here are some of the most widely applicable exceptions: Companies in highly-regulated environments, tax exempt entities, certain registered or “large” investment companies, inactive entities. Additionally, companies that have 1) 20 or more full-time employees; AND 2) a physical presence in U.S.; AND 3) more than $5 million in gross receipts/sales. This is not a complete list. Double check with your accountant or legal counsel if you are unsure. (Of course, this article is neither exhaustive nor legal advice.)
Have this information ready before you log in and file:
- Legal name and DBA/trade name
- Current physical address
- Federal Taxpayer ID number
- State where the company registered/formed
- Individual’s name, date of birth and address
- Number and issuing jurisdiction of U.S. passport (or foreign passport if that is all that is available), driver’s license or state/local/tribal identification
- Digital copy of identifying document
After you file at fincen.gov/boi, you will get a receipt showing the information submitted and that the submission was successful.
There are also services such as FileForms who, for a fee, will file for you. You may want to look into these services if you have many beneficial owners who need to do so.
It is extremely important you file on time to avoid the heavy fines, but it is also extremely easy to do so for most small businesses. There have already been Small Business Development Center clients who have filed with no problems.
If you have questions, please reach out to us for assistance.
Ann Swanson is the regional director of the Small Business Development Center SBDC at the Idaho State University College of Business.
Ann Swanson began working in web communications in 2000. Her career includes marketing director at Portneuf Medical Center, marketing director at Idaho State University College of Business, and owning her own small business.
Ann holds two Master’s degrees from the University of Southern California and has been a marketing professor at Idaho State University. She joined the Pocatello Idaho SBDC in 2011 and is currently the regional director.
Ann helps businesses balance risk and opportunity, and she guides business owners through resources and tools that create real change in growth and sales. Her expertise includes business planning and strategy, financing, marketing plans, competitor analysis, and cybersecurity.
Ann also uses her experience to help businesses navigate digital marketing options. She teaches businesses how to leverage tools such as websites, SEO, e-newsletters, mobile marketing, pay-per-click, and social media to create better relationships with their customers.
