Who Needs to File a BOI Report?
Who Needs to File a BOI Report?
The short answer is nobody as of right now, but read on to learn more!
Corporate Transparency Act (CTA) has been a hot topic of discussion since its enactment on January 1, 2024, especially among small business entrepreneurs. If you have always wondered about Beneficial Ownership Reporting and its implications, worry not, as it has a wider audience to cover, and interestingly, you won’t be the only one. So, without further ado, let’s have a look at the intricacies of this law, its applicability, and the possible effects it can induce on American businesses and recent changes in legal affairs.
What Is the Corporate Transparency Act?
The CTA acts as a preventative measure against numerous financial crimes that demands that a vast majority of U.S. businesses provide information regarding the individuals that own and control them. While its aim is to promote transparency and make things, such as money laundering, harder, for a multitude of business owners, the new rules seem overly complicated.
Under the CTA, it is required for the majority of small businesses to submit BOI reports to the Financial Crimes Enforcement Network (FinCEN). The reports comprise personal information pertaining to the “beneficial owners,” which are defined as persons that own or control a substantial amount of the company.
Who Needs to File a BOI Report?
This legislation extends to numerous entities within the United States, for instance, businesses, LLCs, and other investments. If you possess a moderately-sized, privately-owned business, there is a fair chance this applies to you. However, the following businesses fall under specific exemptions:
- Publicly traded companies
- Nonprofit organizations
- Certain regulated entities such as banks, insurance companies, and large companies operating with 20 plus employees with gross revenue exceeding 5 million dollars
If you have questions regarding whether your company is obliged to file or not, consult FinCEN’s for guidance.
What Goes Into a BOI Report?
If you’re required to file, you’ll have to submit information regarding the following:
1. Beneficial Owners: All persons who own 25% or more of the company, plus anyone who has control over it
2. Company Applicants: The person who submitted the documents to form or register the business entity
Each person must be reported on and include:
- Full legal name
- Date of birth
- Residential address
- Any unique identifier such as a driver license or passport number
Such information is to be provided via an online portal to FinCEN.
Recent Legal Developments: Texas Top Cop Shop, Inc. v. Garland
As companies were gearing up to comply with the deadline of January 1, 2025, a December ruling from the Federal court disrupted all plans. The case, Texas Top Cop Shop, Inc., et al. v. Garland, et al, was able to secure a nationwide preliminary injunction that stops enforcement of the CTA for now.
It was argued by the small business coalitions in this case that the burden of the Republican requirements is heavy on the owners of the businesses and touches some constitutional matters. In this case, it was agreed by the court, at least for the moment, to freeze the enforcement of the law.
So, what does this signify?
- No business is yet required to file the BOI reports.
- The injunction assures that no business will face penalties for not filing during this time.
- Anyone wishing to engage in anticipatory compliance by submitting voluntarily is still permitted to do so.
Should You File a BOI Report Now or Wait?
Every business owner has this question on their minds. There are two approaches to take:
1. Voluntary Compliance
If you are looking to prevent a last-minute filing rush as the injunction gets lifted, it may always make sense to file your BOI report voluntarily right now. Moreover, you should file if you know that it’s something that you’ve done and you want peace of mind. For a detailed filing guide, please check out FinCEN’s BOI Filing Portal.
2. Wait-and-See
As the legislation is not applicable at the moment, there are a number of business owners who have decided to wait until the legal issues get ironed out. But that does not mean that one should not be attentive. If the restraining order is lifted, the deadlines for compliance could be imposed quite suddenly.
Why This Matters for Small Business Owners
The CTA is included in the small business regulation, and it is relevant with the growth of the economy. While such objectives might be aimed at with the best of intentions, the reality is that compliance brings additional burden to already overworked business owners. Managing all these requirements can be a lot, whether you are a solo entrepreneur or a company leader with a large employee count.
The recent injunction is a bit of a relief. But the tightness of that pause is also not permanent, and when the dust settles, the law will be changed as well. Therefore, it is necessary to remain informed, and that kind of understanding will require diligence in following legal news as well as discussing specific situations with one’s attorney or accountant.
Helpful Resources for Staying Updated
If you’re seeking trustworthy insights regarding the CTA and BOI filing requirements, check out these sources:
- FinCEN’s Official CTA Page
Stay informed with the news straight from the center that governs the law.
- CourtListener
Stay tuned to the Texas Top Cop Shop, Inc. v. Garland proceeding.
Supporting and providing legal direction to small businesses.
Helps to figure out the effect of the federal laws on businesses across the United States.
Final Thoughts
A recent court ruling has changed the dynamics of the situation; however, the Corporate Transparency Act and its requirements for BOI reporting are a big deal for small businesses. Currently, the enforcement is suspended, allowing the business owners to look into the details of future compliance.
Whether you want to file voluntarily or wait, either option does work, but the only important matter here is to keep yourself updated. The legal status could shift quickly, and being prepared will help you avoid issues later on. You continuously must keep an eye on the updates and get the advice of trusted professionals so that you are ready to deal with any future changes. Thank you for reading “Who Needs to File a BOI Report” and please share it with fellow business owners.
Bill Yeager, Co-Owner of High Point SEO & Marketing in CT, is a leading SEO specialist, Amazon international best-selling author of the book Unleash Your Internal Drive, Facebook public figure, a marketing genius, and an authority in the digital space. He has been personally coached by Tony Robbins, a fire walker and a student of Dan Kennedy, Founder of Magnetic Marketing. Bill has been on several popular podcasts and the news including Sharkpreneur with Kevin Harrington, FOX, NBC, and ABC by way of his Secret Sauce marketing strategies. Bill enjoys fitness, cars, and spending time with his family when not at work.
