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Navigating New BOI Reporting Requirements: Protect Your Business and Avoid Penalties

Navigating New BOI Reporting Requirements: Protect Your Business and Avoid Penalties

April 16, 2024

There are new Beneficial Ownership Information (BOI) reporting requirements that have taken effect in 2024, and it’s important to understand the nuances of the regulations to ensure compliance and avoid penalties. 

You may file more paperwork this year if you have a small business. The Corporate Transparency Act (CTA), passed in 2021, changed beneficial ownership rules to impact upwards of 32 million businesses in 2024 alone. If you own more than 25% of a company, directly or indirectly, you must be included in the company’s BOI report, filed with the Financial Crimes Enforcement Network (FinCEN). This report includes your name, date of birth, address and other identifying information.1 

This ownership doesn’t have to be direct. The report can include stockholders, partners, limited liability company (LLC) members, directors and owners. The CTA specifically boosts congressional efforts to end money laundering by increasing the reporting obligations of shell companies and other corporate entities that are used by bad actors to shield the identities of their underlying owners.  

The deadline for businesses registered before January 1, 2024, is January 1, 2025. New companies must report within 90 days of receiving an approved state business registration. Reporting obligations can become complicated if you wholly or partly own a company with a substantial stake in another company, especially if your ownership adds up to a stake of more than 25%. Beneficial owners don’t necessarily need to file this report directly, as long as the company in question files it in the appropriate manner. The other professionals you work with may be able to help you with this.  

The new BOI rules apply to limited liability companies (LLCs), limited partnerships, limited liability partnerships (LLPs) and other businesses, including foreign businesses that file in any state. The report must also include control persons who directly or indirectly control business decisions, even if their ownership falls short of the 25% threshold.  

Not every business is subject to these new rules. For example, sole proprietorships and general partnerships typically won’t need to file BOI reports. Federally regulated businesses, such as publicly traded companies, financial institutions and insurance companies, may be similarly exempt, as are businesses with a minimum of 20 full-time employees, more than $5 million in revenue and a substantial footprint in the U.S.  

While your legal or tax representative may be your best choice to discuss specific details of the new BOI rules, we’re always available to chat with you about how your business ownership fits your larger financial goals.