Don't Get Caught Off Guard: BOI Reporting for LLC Owners

‍Five Key Takeaways on BOI Reporting for LLCs

1. Transparency is Key: BOI reporting aims to increase transparency in the U.S. financial system and combat illicit activities.
2. LLCs are Generally Covered: Most LLCs, including single-member LLCs, need to file a BOI report.
3. Know Your Beneficial Owners: A beneficial owner is anyone with significant control over the LLC or who owns at least 25% of it.
4. Deadlines Matter: Existing LLCs have until January 1, 2025, to file, while new LLCs have 30 days after formation.
5. Penalties are Real: Non-compliance can result in hefty fines and even imprisonment.

Introduction

Warmest wishes for a joyous holiday season to you and your loved ones! We hope this time brings cherished moments and a renewed sense of purpose as we approach the new year.  As you enjoy well-deserved time away from your business, it's also an opportune moment to reflect and realign priorities for 2025.

Now, let's dive into a topic that will be crucial for many businesses in the coming year...

The world of business is constantly changing, and keeping up with new regulations can feel like a full-time job in itself. One such regulation that has many small business owners scratching their heads is the Beneficial Ownership Information (BOI) reporting requirement. This rule, mandated by the Corporate Transparency Act (CTA), requires certain entities to disclose information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).

While this new requirement might seem daunting, understanding its purpose and how it impacts your business is crucial. This article breaks down the essentials of BOI reporting, specifically for LLC owners and consultants, and highlights how Purpose Built can help these clients navigate this new financial landscape.

What is BOI Reporting and Why Does it Matter?

The core purpose of BOI reporting is to enhance transparency within the U.S. financial system. By mandating that companies disclose their beneficial owners, FinCEN seeks to curb illicit activities such as money laundering, terrorist financing, and tax evasion. This increased transparency illuminates complex ownership structures, enabling financial institutions and law enforcement agencies to identify suspicious activities and track illicit funds more effectively. Furthermore, this initiative promotes fairness and equity within the tax system by ensuring accurate reporting and generating additional revenue for governments by reducing fraud. Ultimately, BOI reporting strengthens the integrity of the financial system and fosters a more just and equitable financial environment.

Who Needs to File a BOI Report?

The BOI reporting requirement applies to a wide range of entities, including corporations, limited liability companies (LLCs), and other similar entities. This includes single-member consultants, like many of my clients, who register their companies as LLCs for liability purposes. There are some key exemptions, such as large operating companies and certain types of financial institutions, but these are rare.

As an LLC owner or consultant, it's highly likely that your business falls under the purview of this regulation.

What Information Needs to be Reported?

A BOI report requires you to disclose specific information about your company and its beneficial owners. This includes:

• Company Information: Legal name, address, jurisdiction of formation, and Taxpayer Identification Number (TIN).
• Beneficial Owner Information: For each beneficial owner, you need to provide their full legal name, date of birth, address, and a unique identifying number from an acceptable identification document (such as a driver's license or passport).  

Who is considered a "Beneficial Owner"?

This is a critical point to understand. A beneficial owner is any individual who, directly or indirectly:

• Exercises substantial control over the entity, or
• Owns or controls at least 25% of the ownership interests of the entity.  

It's important to note that this definition can encompass individuals who may not be directly involved in the day-to-day operations of the business but still hold significant influence or ownership.

When is the Deadline to File?

The deadline to file a BOI report depends on when your LLC was formed:

• Existing entities (formed before January 1, 2024): You have until January 1, 2025, to file your initial report.
• New entities (formed after January 1, 2024): You have 30 days from the date of your LLC's formation to file your initial report.

What are the Penalties for Non-Compliance?

Failing to comply with BOI reporting requirements can have serious consequences, including:

• Civil penalties: Fines of up to $500 per day for each day the violation continues.
• Criminal penalties: In some cases, non-compliance can lead to imprisonment for up to two years.

How Purpose Built Can Help You Navigate the BOI Landscape

While Purpose Built cannot file the BOI report for you, we can be an invaluable resource in helping you understand and meet these new obligations. We recognize that as an LLC owner or consultant, your focus should be on your core business activities, not deciphering complex financial regulations.

Here's how we can assist you:

• Understanding the Requirements: We can help you determine if your LLC is subject to BOI reporting and guide you through the specific information you need to gather.
• Record Keeping and Organization: We can assist you in establishing systems to maintain accurate and up-to-date records of your beneficial ownership information, ensuring you're prepared for future reporting requirements and updates.
• Stay Current with Financial Regulations: You are busy running your business, do you really want to spend more time keeping up with financial and tax information? Let us help by sharing the information we have learned through many years of working with our small business clients. 
• Personal Financial Planning: Beyond your business needs, Purpose Built can provide comprehensive financial planning and wealth management services that seamlessly integrate your business's financial goals with your personal financial plan. This holistic approach ensures that both your personal and business finances are strategically managed and optimized for long-term success.

Think of Purpose Built as your trusted partner in navigating the complexities of financial and tax reporting and securing your financial future. We provide the expertise and support you need to stay compliant and focus on what matters most – growing your business and achieving your financial goals.

Additional Resources

For more in-depth information on BOI reporting, we recommend exploring the following resources:

• FinCEN's BOI website: https://www.fincen.gov/boi
• BOI Reporting website: https://boir.com/
• FinCEN's Beneficial Ownership Information Reporting Rule Fact Sheet: https://www.fincen.gov/beneficial-ownership-information-reporting-rule-fact-sheet  

Expert Help is Available

The BOI reporting requirement is a significant development in the financial regulatory landscape. By understanding the rules and taking the necessary steps to comply, you can protect your LLC from penalties and ensure its continued success.

Feeling overwhelmed by the complexities of BOI reporting and evolving financial/tax regulations? You're not alone. Purpose Built provides the clarity and support you need to stay compliant and achieve your financial aspirations. 

Reach out to us today and let's start building your path to financial success.

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Frequently Asked Questions (FAQ) about BOI Reporting

Q: What is BOI reporting?

A: BOI reporting is a requirement for certain entities, including many LLCs, to disclose information about their beneficial owners to FinCEN. This helps authorities combat financial crimes.  

Q: Who needs to file a BOI report?

A: Many LLCs will need to file. Exemptions include large operating companies and certain financial institutions. If you're unsure, it's best to seek professional advice.  

Q: What information needs to be reported?

A: You'll need to provide information about your LLC (name, address, TIN) and your beneficial owners (name, date of birth, address, and identification number).

Q: When is the deadline to file?

A: Existing LLCs have until January 1, 2025, to file. New LLCs must file within 30 days of formation.  

Q: What are the penalties for not complying?

A: Penalties can include fines and potential imprisonment.  

Q: How can Purpose Built help?

A: While we cannot file the report for you, we can help you understand the requirements, identify your beneficial owners, and integrate BOI reporting into your overall financial strategy.

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Final Thoughts

Remember, financial planning is not a one-time event; it's an ongoing journey. At Purpose Built, we're here to guide you every step of the way. Whether you need help with financial reporting, such as BOI, creating a tax strategy, or developing a comprehensive financial plan, our team of experts is ready to assist you.

Schedule a consultation today, and let's make 2025 your best financial year yet.

About the Author

Sean Lovison, CPA, CFP®, is a flat fee-only financial planner based in Moorestown, New Jersey, serving clients virtually nationwide. After spending 14 years as a corporate chief financial officer (CFO), receiving and designing compensation plans, he decided to help others navigate their plans.

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