What Are the New BOI Reporting Requirements for LLCs?
As a financial advisor, I'm here to guide you through the new Beneficial Ownership Information (BOI) reporting requirements for LLCs. These rules, effective January 1, 2024, impact many small businesses across the United States.
The Corporate Transparency Act (CTA) mandates certain companies to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). This law aims to combat money laundering and other financial crimes.
Let's break down what LLC owners need to know about BOI reporting.
Who Must Report?
Most LLCs fall under the "reporting company" definition. This includes:
- Domestic LLCs formed by filing with a state secretary of state or similar office
- Foreign LLCs registered to do business in the United States
Exceptions exist for some entities, but most small LLCs will need to report.
What Information Must Be Reported?
Reporting companies must provide:
Company Information:
- Full legal name
- Any trade names or DBAs
- Business street address
- State or tribal jurisdiction of formation
- IRS Taxpayer Identification Number (TIN)
Beneficial Owner Information:
- Full legal name
- Date of birth
- Current residential address
- Unique identifying number from an acceptable identification document
Who Qualifies as a Beneficial Owner?
A beneficial owner is an individual who directly or indirectly:
- Owns or controls at least 25% of the LLC's ownership interests
- Exercises substantial control over the LLC
Substantial control includes:
- Serving as a senior officer
- Authority over appointment or removal of senior officers or a majority of the board
- Direction, determination, or decision of important matters affecting the LLC
When Are the Deadlines?
- Existing LLCs (formed before January 1, 2024): Must file by January 1, 2025
- New LLCs formed in 2024: Must file within 90 days of formation
- LLCs formed in 2025 or later: Must file within 30 days of formation
Updates to previously filed information must be submitted within 30 days of the change.
How to File?
FinCEN opened its online portal for BOI filings on January 1, 2024. All reports must be filed electronically through this system.
What Are the Penalties for Non-Compliance?
Failing to report or providing false information can result in:
- Civil penalties: Up to $500 per day
- Criminal penalties: Fines up to $10,000 and imprisonment for up to two years
Key Considerations for LLC Owners
1. Determine if your LLC is a reporting company
Review the list of 23 exemptions provided by FinCEN. Most small LLCs will not qualify for exemption.
2. Identify beneficial owners
Assess who meets the ownership or substantial control criteria. This may include:
- Members with 25% or more ownership
- Managing members
- Officers with decision-making authority
3. Gather required information
Collect the necessary details for the LLC and each beneficial owner. Ensure you have current, accurate information.
4. Mark your calendar
Note the applicable deadline for your LLC. Set reminders to file on time and update information as needed.
5. Prepare for ongoing compliance
Establish processes to track changes in ownership or control. Plan to file updates within the 30-day window.
6. Consider professional assistance
The complexities of BOI reporting may warrant consulting with a legal or tax professional. They can help ensure accurate filings and ongoing compliance.
Frequently Asked Questions
Q: Are single-member LLCs required to file BOI reports?
A: Yes, single-member LLCs are not exempt and must file BOI reports [3].
Q: What if my LLC qualifies for an exemption?
A: Exempt entities do not need to file BOI reports. However, you should document why your LLC qualifies for exemption in case of future inquiries.
Q: Can I file a BOI report by mail or fax?
A: No, all BOI reports must be filed electronically through FinCEN's online portal [3].
Q: What if I'm not sure if someone qualifies as a beneficial owner?
A: When in doubt, it's safer to report. Consult with a legal professional if you need clarification on specific cases.
Q: How often do I need to update my LLC's BOI report?
A: You must file an updated report within 30 days of any change to previously reported information [2].
Q: Is there a fee to file a BOI report?
A: No, FinCEN does not charge a fee for filing BOI reports [1].
Q: What happens if I miss the filing deadline?
A: Late filings may result in penalties. File as soon as possible if you miss the deadline, and consider seeking legal advice.
Q: Can I designate someone else to file the BOI report for my LLC?
A: Yes, you can authorize a third party to file on behalf of your LLC. However, you remain responsible for the accuracy of the information.
Q: How long will FinCEN keep my LLC's BOI information?
A: FinCEN will maintain the information for at least five years after the reporting company is dissolved or ceases to exist [4].
Q: Will the BOI information be publicly available?
A: No, BOI reports are confidential. Access is limited to authorized government agencies and financial institutions with customer consent [4].
Conclusion
The new BOI reporting requirements add a layer of compliance for many LLC owners. Understanding your obligations and preparing in advance will help ensure a smooth filing process.
Remember:
- Determine if your LLC must report
- Identify beneficial owners
- Gather required information
- File on time
- Update as needed
Stay informed about any changes to the reporting requirements. The landscape of business compliance evolves, and staying ahead of new regulations protects your LLC and its owners.
As your financial advisor, I'm here to help you navigate these new requirements. Don't hesitate to reach out with questions or concerns about BOI reporting for your LLC.
[1] https://www.fincen.gov/boi
[2] https://www.legalzoom.com/articles/boi-reporting-requirements-2024
[6] https://www.insideindianabusiness.com/articles/your-llc-needs-to-file-a-form-online-right-now
[7] https://www.eisneramper.com/insights/tax/boi-reporting-begins-1123/
Material prepared herein has been created for informational purposes only and should not be considered investment advice or a recommendation. Information was obtained from sources believed to be reliable but was not verified for accuracy. It is important to note that federal tax laws under the Internal Revenue Code (IRC) of the United States are subject to change, therefore it is the responsibility of taxpayers to verify their taxation obligations.
Savvy Wealth Inc. is a technology company. Savvy Advisors, Inc. is an SEC registered investment advisor. For purposes of this article, Savvy Wealth and Savvy Advisors together are referred to as “Savvy”. All advisory services are offered through Savvy Advisors, while technology is offered through Savvy Wealth. The views and opinions expressed herein are those of the speakers and authors and do not necessarily reflect the views or positions of Savvy Advisors
What Are the New BOI Reporting Requirements for LLCs?
As a financial advisor, I'm here to guide you through the new Beneficial Ownership Information (BOI) reporting requirements for LLCs. These rules, effective January 1, 2024, impact many small businesses across the United States.
The Corporate Transparency Act (CTA) mandates certain companies to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). This law aims to combat money laundering and other financial crimes.
Let's break down what LLC owners need to know about BOI reporting.
Who Must Report?
Most LLCs fall under the "reporting company" definition. This includes:
- Domestic LLCs formed by filing with a state secretary of state or similar office
- Foreign LLCs registered to do business in the United States
Exceptions exist for some entities, but most small LLCs will need to report.
What Information Must Be Reported?
Reporting companies must provide:
Company Information:
- Full legal name
- Any trade names or DBAs
- Business street address
- State or tribal jurisdiction of formation
- IRS Taxpayer Identification Number (TIN)
Beneficial Owner Information:
- Full legal name
- Date of birth
- Current residential address
- Unique identifying number from an acceptable identification document
Who Qualifies as a Beneficial Owner?
A beneficial owner is an individual who directly or indirectly:
- Owns or controls at least 25% of the LLC's ownership interests
- Exercises substantial control over the LLC
Substantial control includes:
- Serving as a senior officer
- Authority over appointment or removal of senior officers or a majority of the board
- Direction, determination, or decision of important matters affecting the LLC
When Are the Deadlines?
- Existing LLCs (formed before January 1, 2024): Must file by January 1, 2025
- New LLCs formed in 2024: Must file within 90 days of formation
- LLCs formed in 2025 or later: Must file within 30 days of formation
Updates to previously filed information must be submitted within 30 days of the change.
How to File?
FinCEN opened its online portal for BOI filings on January 1, 2024. All reports must be filed electronically through this system.
What Are the Penalties for Non-Compliance?
Failing to report or providing false information can result in:
- Civil penalties: Up to $500 per day
- Criminal penalties: Fines up to $10,000 and imprisonment for up to two years
Key Considerations for LLC Owners
1. Determine if your LLC is a reporting company
Review the list of 23 exemptions provided by FinCEN. Most small LLCs will not qualify for exemption.
2. Identify beneficial owners
Assess who meets the ownership or substantial control criteria. This may include:
- Members with 25% or more ownership
- Managing members
- Officers with decision-making authority
3. Gather required information
Collect the necessary details for the LLC and each beneficial owner. Ensure you have current, accurate information.
4. Mark your calendar
Note the applicable deadline for your LLC. Set reminders to file on time and update information as needed.
5. Prepare for ongoing compliance
Establish processes to track changes in ownership or control. Plan to file updates within the 30-day window.
6. Consider professional assistance
The complexities of BOI reporting may warrant consulting with a legal or tax professional. They can help ensure accurate filings and ongoing compliance.
Frequently Asked Questions
Q: Are single-member LLCs required to file BOI reports?
A: Yes, single-member LLCs are not exempt and must file BOI reports [3].
Q: What if my LLC qualifies for an exemption?
A: Exempt entities do not need to file BOI reports. However, you should document why your LLC qualifies for exemption in case of future inquiries.
Q: Can I file a BOI report by mail or fax?
A: No, all BOI reports must be filed electronically through FinCEN's online portal [3].
Q: What if I'm not sure if someone qualifies as a beneficial owner?
A: When in doubt, it's safer to report. Consult with a legal professional if you need clarification on specific cases.
Q: How often do I need to update my LLC's BOI report?
A: You must file an updated report within 30 days of any change to previously reported information [2].
Q: Is there a fee to file a BOI report?
A: No, FinCEN does not charge a fee for filing BOI reports [1].
Q: What happens if I miss the filing deadline?
A: Late filings may result in penalties. File as soon as possible if you miss the deadline, and consider seeking legal advice.
Q: Can I designate someone else to file the BOI report for my LLC?
A: Yes, you can authorize a third party to file on behalf of your LLC. However, you remain responsible for the accuracy of the information.
Q: How long will FinCEN keep my LLC's BOI information?
A: FinCEN will maintain the information for at least five years after the reporting company is dissolved or ceases to exist [4].
Q: Will the BOI information be publicly available?
A: No, BOI reports are confidential. Access is limited to authorized government agencies and financial institutions with customer consent [4].
Conclusion
The new BOI reporting requirements add a layer of compliance for many LLC owners. Understanding your obligations and preparing in advance will help ensure a smooth filing process.
Remember:
- Determine if your LLC must report
- Identify beneficial owners
- Gather required information
- File on time
- Update as needed
Stay informed about any changes to the reporting requirements. The landscape of business compliance evolves, and staying ahead of new regulations protects your LLC and its owners.
As your financial advisor, I'm here to help you navigate these new requirements. Don't hesitate to reach out with questions or concerns about BOI reporting for your LLC.
[1] https://www.fincen.gov/boi
[2] https://www.legalzoom.com/articles/boi-reporting-requirements-2024
[6] https://www.insideindianabusiness.com/articles/your-llc-needs-to-file-a-form-online-right-now
[7] https://www.eisneramper.com/insights/tax/boi-reporting-begins-1123/
Material prepared herein has been created for informational purposes only and should not be considered investment advice or a recommendation. Information was obtained from sources believed to be reliable but was not verified for accuracy. It is important to note that federal tax laws under the Internal Revenue Code (IRC) of the United States are subject to change, therefore it is the responsibility of taxpayers to verify their taxation obligations.
Savvy Wealth Inc. is a technology company. Savvy Advisors, Inc. is an SEC registered investment advisor. For purposes of this article, Savvy Wealth and Savvy Advisors together are referred to as “Savvy”. All advisory services are offered through Savvy Advisors, while technology is offered through Savvy Wealth. The views and opinions expressed herein are those of the speakers and authors and do not necessarily reflect the views or positions of Savvy Advisors
