New Federal Reporting Requirements for Small Businesses: FinCEN, BOI & the CTA

Woman concentrating on filing BOI with FinCEN

New Federal Reporting Requirements for Small Businesses: BOI, CTA & FinCEN

UPDATE AS OF December 27, 2024

Enforcement is on Temporary Hold
On December 26, 2024, the U.S. Court of Appeals for the Fifth Circuit issued an unexpected decision, reinstating a nationwide injunction that halts the enforcement of BOI reporting requirements. This ruling reversed the court’s previous decision from just three days earlier, which had temporarily lifted the injunction. According to commentary released on December 27, FinCEN has stated its intention to adhere to the court’s latest directive.

From the FinCEN website: “In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.“

What’s next?

New arguments are scheduled for March 25, 2025.

What does this mean for small businesses?

  • Stay Prepared: Businesses should monitor legal developments closely and be ready to comply if the injunction is lifted.
  • No Immediate Reporting Obligations: Reporting Companies are not required to file beneficial ownership information (BOI) reports at this time, including those originally due by January 13, 2025.
  • Voluntary Submissions: FinCEN allows voluntary BOI submissions but does not currently require them.

If you’re a small business owner, you might not be aware of new federal reporting requirements aimed at increasing transparency about who owns and controls businesses. These rules are part of an effort to combat financial crimes like money laundering and tax evasion, but they also mean your business may need to file certain information with the government. This guide will explain what these requirements are, why they matter, and what steps you need to take to comply before the January 13, 2025 deadline.

What Are BOI, CTA, and FinCEN?

The goal is to create a secure database of ownership information to improve transparency and reduce financial crime.

Why Do Small Businesses Need to Register with FinCEN?

The CTA mandates that businesses report their ownership information to FinCEN. If you own a small business, this filing ensures your company complies with federal law. The information provided will be secure and used only for law enforcement or regulatory purposes.

Failing to file your BOI report by January 13, 2025 can lead to fines up to $500 per day and even criminal penalties, so it’s crucial to meet the deadline.

Why Are These New Small Business Requirements in Place?

The Corporate Transparency Act (CTA) was passed by Congress to prevent individuals from hiding behind anonymous business structures to engage in illegal activities. By requiring businesses to report their Beneficial Ownership Information (BOI) to FinCEN, the government can more easily track the individuals who own or control companies.

For most small businesses, this simply means filing some basic information about the people behind the business. While it may feel like an extra task, it’s an important step to ensure compliance with federal law and to avoid hefty fines.

Does Your Business Need to File BOI with FinCEN?

Here’s a quick guide to determine if your small business is required to file:

You MUST file if your business:

  • Is a corporation, limited liability company (LLC), or other similar entity created by filing paperwork with a state or tribal government.
  • Was formed before or after January 1, 2024 (with slightly different filing requirements based on the date of formation).

You DO NOT need to file if your business is:

  • A sole proprietorship or general partnership that didn’t file formation paperwork with the state.
  • A publicly traded company or an entity already heavily regulated by the federal government (e.g., banks, insurance companies).
  • A company with more than 20 full-time employees, over $5 million in annual revenue, and a physical office in the U.S.

For most small businesses, particularly LLCs or single-owner corporations, filing will be required. If you’re unsure, consult your CPA or attorney.

How to Register Your Business with FinCEN

Follow these steps to register your BOI with FinCEN:

  1. Visit the FinCEN Filing Portal: Use https://boiefiling.fincen.gov/ to access the BOI filing system.
  2. Gather Required Information:
    • Your business’s legal name.
    • Address of your business’s principal office.
    • EIN (Employer Identification Number) or TIN (Taxpayer Identification Number).
    • Beneficial owner details, including:
      • Full legal name
      • Date of birth
      • Address
      • A unique identifying number (from a driver’s license, passport, or another government-issued ID).
  3. Prepare Supporting Documents:
    • Ensure you have copies of identification documents for each beneficial owner.
    • Verify that your business entity records (e.g., articles of incorporation or operating agreements) are accurate.
  4. Complete the Filing Online:
    • Follow the prompts to enter your information and upload any necessary files.
    • Double-check your submission for accuracy before submitting.

Tips to Prepare for BOI Registration

  • Check Your Records Early: Make sure all ownership information is current and accurate before you start the registration process.
  • Consult an Expert: If you’re uncertain about your filing requirements, ask your CPA, attorney, or business advisor for clarification.
  • Don’t Wait Until the Deadline: Registering early gives you time to resolve any issues with your paperwork.
  • Keep Copies of What You Submit: Save a copy of your BOI report and any supporting documents for your records.

Key Dates and Deadlines for BOI Registration

  • Existing businesses (formed before Jan. 1, 2024): Must file by January 13, 2025.
  • New businesses (formed Dec 3-23, 2024): Must file by March 24 – April 13, 2025.
  • New businesses (formed on or after Jan. 1, 2024): Must file within 30 days of formation.

Where to Register Your Small Business BOI

Visit the official FinCEN BOI filing portal: https://boiefiling.fincen.gov/. The system is user-friendly and secure, and you can file online in just a few steps.

Final Thoughts

Understanding BOI, CTA, and FinCEN requirements might feel overwhelming, but compliance is straightforward when broken down into simple steps. Make sure your small business meets the January 13, 2025 deadline to avoid penalties. Preparing early will save you time and stress while ensuring you’re on the right side of the law.

If you have further questions, consult a business advisor or visit the FinCEN FAQ page for more details: https://www.fincen.gov/boi-faqs.

Need an attorney to help decide what your business should do next?

Our colleague, Colin Hill can help.

Colin Hill is the owner of Hill Innovative Law, a law firm that helps start-up companies and entrepreneurs from formation to funding, helps larger companies as an outside general counsel (Corporate Compliance, M&A, Technology Licensing Agreements, ETC.), and helps companies with securities filings and to become a public company. Colin Hill has helped clients file BOI Reports and would be happy to help you or answer any questions you have.

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