Understanding FinCEN’s New BOI Reporting Requirements
What the heck is going on with this new BOI report you may have heard about?! Get all the in-plain-English answers right here.
If you’ve been wondering about the new Beneficial Ownership Information (BOI) reporting requirements issued by FinCEN, you’re not alone. These regulations are causing confusion among small business owners, LLCs, and entrepreneurs across the country. It doesn’t help that now in late 2024, things are changing yet again.
In this blog post, I’ll walk you through everything you need to know about filing your BOI report, who these requirements apply to, and how to avoid scams. Let’s get started!
What is FinCEN?
FinCEN, or the Financial Crimes Enforcement Network, is a part of the US Department of Treasury. Its mission is to safeguard the financial system by combating crimes like money laundering and fraud.
The Corporate Transparency Act (CTA) is a federal law enacted in 2021 (as part of the Anti-Money Laundering Act). The main goal of the CTA is to increase transparency in business ownership and prevent international money laundering, tax evasion, and more. Apparently – the bad guys out there like to use LLCs as shell companies to hide this type of illegal activity. Under the CTA, certain types of US businesses, like LLCs and corporations, will be required to disclose their beneficial ownership information to FinCEN. This ensures that the federal government can identify who owns and controls these entities, promoting accountability and hopefullyreducing financial crime.
If you think back to when you registered for your LLC (IF you have one), you actually did that with your state government. Prior to the CTA and the new BOI requirements, the federal government is not privy to this information. So now we have this new rule via the CTA that theoretically requires businesses (specifically – LLCs) to file BOI reports to provide transparency about their ownership structures.
Does My Business Need to File a BOI Report?
One of the most common questions is, “Who does the BOI reporting requirement apply to?” Let’s break it down.
✅ Businesses That Must File a BOI report:
- LLCs, corporations, and other entities registered to do business in the US
❌ Businesses that do not need to file a BOI report:
- Sole proprietorships that do NOT have their LLC registration 👈 this is the most likely exception to apply to you
- “Large” companies – LLCs or corporations that are publicly traded companies, or have 20+ employees and $5+ million in revenue (this is less likely to apply to you if you’re reading this post, sorry)
- Certain nonprofits, banks, and insurance companies
For the full breakdown of who the BOI requirement applies to/does not apply to, this guide straight from FinCEN is a great resource.
So in other words, if you are a small business with your LLC registration, this new BOI reporting requirement applies to you. If you are a sole prop (with or without a DBA) withOUT an LLC registration, the new BOI reporting requirement does NOT apply to you.
Avoid Scams – You Shouldn’t Have to Pay for to do your BOI report
Unfortunately, like with many new legal filings, scammers and pay-to-file sites are exploiting the new BOI reporting requirements and targeting unknowing small business owners. Here are some tips to protect yourself:
- Only file directly through the FinCEN site: The only official place to file your BOI report is on fincen.gov. Be cautious of websites that claim to assist for a fee.
- Filing is always FREE! If a site asks for payment, it’s a scam. BOI reports are free to file through FinCEN.
- Watch for phishing attempts: FinCEN will not email or call you asking for payment or sensitive details. Report suspicious activity to the authorities.
It’s been a bit tricky because there’s not one official government entity assigned the duty of reaching out to us LLC owners with info or reminders on filing this. It’s just sort of…up to us. You’re on your own kid, you always have been!
How to File Your BOI Report with FinCEN: Step-by-Step Instructions
So now that we got the WHY out of the way, let’s cover the HOW – How to file your BOI report is actually a very straightforward, simple process. Here’s the step-by-step 👇
- Make sure you have your state drivers license or passport handy. You will want to have a scanned JPG or PDF of it ready to submit as well (just the front of your ID or the photo page of your passport).
- Head to the for real FinCEN website at https://www.fincen.gov/
- Click “file your report now”.
- Click “File BOIR”.
- You have two options – you can File your BOIR via a PDF using Adobe Reader, or File it online. I chose the second option and clicked “Prepare & Submit BOIR”.
- Next, you’ll be asked if this is your initial report (alternatively, you may be correcting or updating a prior report). Assuming this is the first time you’re filing, choose “initial report”. Click next.
- Check the box to receive a FinCEN ID.
- Fill in the legal name of your LLC as the “Reporting Company legal name”. This should match the name on your LLC registration with your state.
- Select and then enter your tax identification type – either your EIN or your SSN. I generally opt to use my EIN any time I am given this choice.
- Enter your country of jurisdiction (most likely the US).
- Select your state of formation (wherever you registered your LLC).
- Enter the current physical address of your LLC. Then click next.
- If you are filing your BOI report for an LLC you formed prior to January 1, 2024, then you will check the box that indicates this is an “existing reporting company”. This is important so that you don’t have to fill out info for your company applicant. (Obviously, if you’re a new LLC then don’t check this box.)
- You shouldn’t need to fill anything out until you get to the “Legal Name & Date of Birth” area near the bottom of this page. Enter your legal last & first name, along with your birthday.
- Enter your residential address.
- Finally, choose your form of ID (either your drivers license or your passport). Enter the document ID number from that item, and then attach a JPG or PDF copy of it.
- Check the agree box, and hit next.
- You’ll enter your email and your name, hit agree once again, and submit!
As much fuss as everyone is making about this, it’s really not that tough!
When Do You Need to File Your BOI Report?
The deadline for filing your BOI report depends on when your LLC was formed.
- If your LLC was formed before January 1, 2024: You have until January 1, 2025, to submit your initial BOI report (with the caveats below).
- If your LLC was formed on or after January 1, 2024 until December 31, 2024: You have 90 calendar days from your registration to submit your initial BOI report.
- If your LLC was formed on or after January 1, 2025: You have 30 calendar days from your registration to submit your initial BOI report.
…but hold up, because recent developments in December 2024 have impacted these deadlines 👇
🚨Latest Updates: Enforcement Challenges After December 2024 Court Rulings
As of December 2024, there have been legal challenges that delayed some aspects of the BOI reporting enforcement. While businesses are still required to comply, penalties for late filings have been paused temporarily.
this warning is currently on the FinCen BOI reporting page
On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against the enforcement of CTA. The court’s decision, in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., found that the CTA likely exceeded Congress’s constitutional authority, infringing upon states’ rights under the Tenth Amendment.
In response, the U.S. Department of Justice filed a notice of appeal on December 5, 2024, seeking to overturn the injunction. Meanwhile, FinCEN announced that it would comply with the court’s order and temporarily halt enforcement of the BOI reporting requirement. This has led to a lot of confusion and uncertainty about whether to submit your BOI report or not (if you haven’t yet). Bottom line, you can still submit the BOI report, but the potential penalties of not submitting in time for the deadline are currently not enforceable.
It’s up to us to stay informed about the ongoing legal proceedings and be prepared to comply promptly if the injunction is lifted. That’s why in my humble opinion, I’m fine just submitting the (very simple) report and being done with this, so I don’t have to worry about it anymore when & if it becomes enforceable again. Stay updated by checking FinCEN’s official updates.
BOI Reporting Deadlines & Penalties*
* Assuming this becomes enforceable again in the foreseeable future…
Prior to all the hullaballoo in December 2024, the biggest hype around the BOI reporting requirements has been about the potential fines & penalties for not submitting on time (ie, before the January 1, 2025 deadline).
Entities that did not file their BOI report on time, submitted incomplete or inaccurate information, or intentionally provided false information would be subject to penalties of up to $500 per day for each day the violation continued. Additionally, criminal penalties included fines of up to $10,000 and/or imprisonment of up to two years for willful violations, such as deliberately avoiding the filing requirement or submitting fraudulent details.
These steep penalties underscored the seriousness of getting compliant…but the preliminary injunction means enforcement has been halted, at least for the time being. Again, I suggest getting prepared and personally see no downside to submitting your initial report so that you don’t have to worry about whatever happens with this in the future.
Finally, FinCEN has a very comprehensive FAQ page here that pretty much answers every question under the sun on the new requirement.
Questions? Yall let me know!
Is this report a file once and done kind of deal? Unless, changes were made of course.
Yes, it’s only for new LLCs (or existing, prior to 2024), or if you make any ownership changes.
Thank you for such a clear breakdown of this!
Thank you for clarifying! I keep getting emails from my virtual PO Box stating I NEED to file and when they list the exemptions, they don’t say sole proprietors. And of course, they’re promoting they can file for me for a fee. I’m a sole proprietor and have been ignoring their urgent notifications.
Janet – THANK YOU! Once again, you’ve made something I’ve dreaded all year into something easy and, most importantly, now DONE!!! I can’t tell you how much I appreciate this post and all of your insight and wisdom! Again, thank you, thank you, thank you!!!