Understanding BOI Requirements: What Small Business Owners Need to Know
We’re going to be talking about something you’ve probably seen a lot of buzz—and confusion—around: the BOI reporting requirements, or Beneficial Ownership Information.
There’s been a lot of misinformation out there, so let’s clear it up. Interestingly, this topic also ties into my own story about once wanting to work for the FBI. Why? Because this reporting requirement is part of a larger effort to catch white-collar crimes, such as money laundering. While that might sound like something far removed from your world as a small business owner, it actually impacts you directly so stick with me through this so you can feel fully informed.
So, what is beneficial ownership information?
It falls under the authority of the Federal Crime Enforcement Network, better known as FinCEN. I had never even heard of this organization until recently, and many professionals in the industry hadn’t either. FinCEN is heavily involved in anti-money laundering efforts. You’ve probably seen news stories or crime shows that reference people using LLCs for fraudulent activities. This is one of the ways illegal operations can be hidden, and the government is working to prevent that through BOI reporting.
The big question I see over and over is: Who needs to comply with BOI reporting?
It depends on your business’s legal structure. If you’re a sole proprietor, chances are you don’t need to file this report. BOI reporting is required for businesses that have registered as entities with their Secretary of State—such as LLCs, S Corps, or other types of corporations. When you register as one of these entities, you’ve essentially created a new organization, which is what triggers the need to report.
If you have an EIN but are still operating as a sole proprietor (not a separate legal entity), then you likely do not have to file. This requirement is specific to LLCs, S Corps, and other corporations. The key threshold is ownership or control of 25% or more of the organization. Most of you listening are probably small business owners and the sole member of your LLC so yes, this does apply to you.
If you fall outside of that, say you’re in a partnership or own a multi-member LLC, then you may need to do a bit more research or seek guidance to see how the rules apply to your specific situation. But overall, if you’re a small business owner with a registered LLC, you likely need to file a BOI report.
What information is needed for a BOI report?
The BOI report itself asks for very basic information—your name, address, date of birth, company information, members of your company, and some form of identification. That’s it. It’s all very simple and straightforward. In fact, the feedback I’ve received from clients is that the report takes five minutes or less to complete. So, it’s not a major task. And, at this point, you don’t even have to file it annually. It’s a one-time report unless something significant changes—like your ownership structure or business entity details. In that case, you’d simply update the report. Otherwise, it’s one and done, which is surprisingly nice (and rare) for something government-related.
Now, here’s the part that makes it important: the penalty for not filing can be up to $500 per day after your deadline. That’s why I wanted to dedicate an episode to this—to help you avoid unnecessary fees. Will they start enforcing these fines immediately? Can they realistically track every business that misses the deadline? That’s still unclear. But in my opinion, it’s better to be safe than sorry. Especially since filing is quick and doesn’t require hiring a professional. It should be something you can take care of on your own.
What else should you know about BOI Requirements?
The deadline to file this report is January 1, 2025, if you’re already an existing entity and listening to this in real time. If you’re a newly formed entity in 2024, you have a bit more of a grace period. Going forward, anyone creating a new entity will need to file within 90 days of formation.
Those are the basics. While the process may sound official and complicated, it really should be easy for most business owners. I’m also going to run through a list of the most common questions I’ve seen about this, and I’ll do my best to answer them. Plus, I’ll include a direct link to the FinCEN website so you can file your report easily. You’ll be able to click the link and knock it out quickly.
One of the most common questions is: Who was supposed to tell me about this? Was it my accountant? My CPA? The IRS? Why am I just now hearing about it from other business owners on Facebook or Instagram?
The confusion is understandable. This isn’t connected to the IRS—it’s a completely separate agency called FinCEN, which most people (even professionals) hadn’t heard of before. Because it’s not tied to tax filings or the IRS, it hasn’t been widely communicated, which has created a real barrier for business owners. That’s why I felt so strongly about creating this episode—so I can do my part in helping you stay informed.
Unfortunately, there’s no clear answer for who “should” have told you. Ideally, wherever you normally get your financial or business updates is where you would’ve learned about it. But sometimes things like this slip through the cracks. That’s why having a strong business owner community matters—it’s often where we find out about important things first.
What if I’m a sole proprietor—do I still have to report?
The quick answer is no. If you’re a sole proprietor, you’re not considered a separate legal entity. In that case, this requirement does not apply to you at this time.
Do small, family-run businesses need to comply? That depends on your legal structure. If your business is set up as a sole proprietorship, then no—you’re likely exempt. But if you’re registered as an LLC, S-Corp, or another type of legal entity, then yes, you will need to comply.
In summary, we’ve covered what BOI (Beneficial Ownership Information) is, why it matters, who needs to comply, the deadline for filing, what the penalties are for not filing, and how to get it done.
Listen to this episode!
Be the first to comment