Ep. 236: Understanding the New Beneficial Ownership Information Requirement for Small Businesses in the US
UPDATE 3/27/25: the Financial Crimes Enforcement Network — also known as FinCEN, which is part of the Treasury — issued an interim final rule on March 21 exempting all U.S. citizens and U.S. companies from the reporting requirement. The rule is open to public comment and set to be finalized later this year.
UPDATE 12/27/2024: Back in Litigation; Voluntary submissions only. The FINCEN BOI site has details of this and all alerts.
UPDATE 12/23/2024: the federal Court of Appeals issued a decision on December 23, 2024, which reinstates the requirement for filing beneficial ownership information with the Financial Crimes Enforcement Network (FinCEN)he CTA. NEW Deadline to file: January 13, 2025.
UPDATE 12/6/2024: a U.S. District Court in Texas issued an injunction, putting the CTA and the required filing for small business on hold.
There’s a crucial new regulation that indie retail store owners in the US need to know about: the new beneficial ownership information requirement. While regulatory changes often feeling overwhelming and daunting, I’m hoping to help you navigate this new regulation with ease and confidence.
Keep reading to learn how to disclose beneficial ownership details. We’ll explore what that means, who needs to file, and the reasons behind this mandate.
In this blog post, I’ll answer all your pressing questions, share my personal experience with the filing process, and clarify misconceptions about potential scams. You’ll also learn some logistical tips to get the paperwork out of the way.
Disclaimer: The following isn’t legal advice. Do your due diligence to determine if you need to file your ownership information with the US Treasury.
As independent retailers, navigating through regulations and compliance requirements can be a daunting task. However, staying informed about new regulations is crucial to ensure that your business operates smoothly and legally.
One such regulation that independent retailers need to be aware of is the beneficial ownership information requirement in the United States.
What Is The Bipartisan Corporate Transparency Act?
Enacted in 2021, The Bipartisan Corporate Transparency Act was created to curb illicit finance. It requires many companies doing business in the United States to report information about the individuals who ultimately own or control them.
The goal behind reporting who owns and benefits from these companies is to prevent money laundering and other financial crimes.
In essence, it’s an anti-money laundering law. The government wants to know the REAL people who own businesses in the US.
For the most up-to-date information and updates regarding Beneficial Ownership Information (BOI), you’ll visit the Financial Crimes Enforcement Network (FinCEN) website. FinCEN is a bureau of the US Department of the Treasury.
What Is Beneficial Ownership Information?
Beneficial ownership refers to the individuals who ultimately own or control a legal entity, such as a corporation, LLC, or partnership.
The beneficial ownership information requirement mandates that certain entities disclose information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Department of the Treasury.
You probably report this information to your state already, but doing so at the federal level is a new requirement.
Why Is It Important To Report My Beneficial Ownership Information?
This requirement is part of the US government’s efforts to combat money laundering, terrorist financing, and other illicit activities. By disclosing beneficial ownership information, authorities can better trace and prevent the misuse of corporate structures for illegal purposes.
Okay, But…Is This Just A Scam?
Given the prevalence of scams and fraudulent activities targeting businesses, it’s natural to be cautious! However, the beneficial ownership information requirement is a legitimate regulation enforced by the US government to enhance transparency and accountability in the financial system. It’s essential to comply with this requirement to avoid penalties and legal repercussions.
With that, don’t fall for scams. You are more than capable of filing this for your business. Be cautious of emails offering filing as a service.
Who Needs To File?
Not all businesses are required to file beneficial ownership information. The requirement applies to certain types of legal entities, including corporations, LLCs, and other similar entities formed or registered in the United States.
Sole proprietorships, publicly traded companies, and certain other entities are exempt from this requirement.
You may be thinking, “I’m a one-human shop sole prop, I don’t need to file this.” However, I want you to be absolutely sure. If you filed an LLC with your state, you’re most likely NOT a sole proprietor.
The BOI website has a section to help you determine if you need to file. You can also ask your bookkeeper and or CPA for clarification.
How Easy Is It To File?
Fortunately, complying with the BOI requirement is relatively straightforward! You can file online or submit the necessary forms via mail.
You’ll need to have the following information on hand to file:
- Full name
- Date of birth
- Addresses (residential & business)
- EIN #
- A copy of your ID (driver’s license or passport)
- The identifying number from your ID
You can watch a five-minute video demonstration of how to file your BOI here.
Do Business Owners Have To Pay To File (Or Pay Someone To File For Them)?
Business owners are NOT required to pay someone to file beneficial ownership information (BOI) on their behalf. While some businesses may choose to hire legal or compliance professionals to assist with the filing process, it is not necessary OR mandatory.
If you feel uncertain or overwhelmed by the filing process, then I recommend talking to a professional who specializes in regulatory compliance. You can also check with your bookkeeper or CPA to see if they’re filing on your behalf.
Kathy, Did You File Your BOI Yet?
I sure did! I watched the YouTube tutorial, made sure I had a copy of my driver’s license to upload, and completed my filing online. It took me less than five minutes.
Should You Get A FinCEN Number?
When you visit the site, you’ll see that there’s an option to also get a FinCEN number.
While not mandatory, obtaining a FinCEN number can streamline the process of filing beneficial ownership information and other related compliance activities. A FinCEN number serves as a unique identifier for businesses and simplifies interactions with FinCEN and other regulatory authorities.
Is There A Filing Deadline?
Short answer for most people who listen to this podcast: by January 1, 2025.
Here’s what the Filing Guide says:
“If a reporting company already exists as of January 1, 2024, it must file its initial BOIR by January 1, 2025.
If a reporting company is created or registered to do business in the United States on or after January 1, 2024 and before January 1, 2025, it must file its initial BOIR within 90 days after receiving actual or public notice that its creation or registration is effective.
If a reporting company is created or registered to do business in the United States after January 1, 2025, then it must file its initial BOIR within 30 days after receiving actual or public notice that its creation or registration is effective.”
How Often Will I Have To File Or Renew My BOI?
Unless there are changes in ownership or structure, you only need to file your beneficial ownership information once. Businesses are required to update their beneficial ownership information within a reasonable time frame after any changes occur.
It’s important for business owners to stay vigilant and monitor any changes in their ownership structure to ensure compliance with BOI requirements. It sounds like failure to update this information in a timely manner could result in penalties or legal consequences.
Make Sure You File Your BOI Before January 1, 2025!
To summarize, here’s what you need to know about this new regulation:
- Filing is NOT hard.
- You do not need to pay for or hire anyone to do this.
- Filing will take you less than 10 minutes.
- If you’re an indie retailer with a legal business formation, such as an LLC or Corporation, you need to file your BOI before 01/01/25. This is not required for sole proprietors.
- This regulation is legitimate and required by The US Department of Treasury.
- You only have to file your BOI ONCE, not annually.
- Ready to file? Go here: https://boiefiling.fincen.gov/
Be sure to share this episode with ALL of your small business friends. I don’t like all the scare tactics I’m seeing about fines, but my guess is there would be an issue and probably fines if you don’t file. Just get it done (and help your small business friends avoid any issues by sharing this post).
Resources
- Shopkeeper Shoutout: Kenya, owner of Greenhouse Mercantile
- File your beneficial ownership information before January 1, 2025
- BOI Filing Guide from FinCEN
- Apply to join Master Shopkeepers, the only territory-protected retail training mastermind for independent brick and mortar store owners
Timestamps
- [03:50] What Is The Bipartisan Corporate Transparency Act?
- [06:16] What Is Beneficial Ownership Information?
- [07:17] Why Is It Important To Report My Beneficial Ownership Information?
- [07:46] Okay, But…Is This Just a Scam?
- [08:36] Who Needs To File?
- [10:41] How Easy Is It To File?
- [12:21] Do Business Owners Have To Pay To File (Or Pay Someone To File For Them)?
- [13:18] Kathy, Did You File Your BOI Yet?
- [13:41] Should You Get A FinCEN Number?
- [14:05] Is There A Filing Deadline?
- [16:35] How Often Will I Have To File Or Renew My BOI?
- [17:35] Make Sure You File Your BOI Before January 1, 2025!
Connect With Kathy
Kathy Cruz is an Independent Retail Coach who helps store owners work smarter, profit more, and grow their brick and mortar businesses.
Connect with Kathy and learn more here:
Website: www.savvyshopkeeper.com
Instagram: @savvyshopkeeper
Mastermind Group: Master Shopkeepers