Are you going to jail because you didn’t file your BOI Report? I’m tired of seeing good people go to prison. You’re a good person, right? You don’t want to go to prison, do you?
Well, the government quietly created a new reporting requirement for ALL companies, and if you don’t file this report, then you face 2 years in prison, a $10,000 fine, and even DAILY fines of $500 per day.
When does this new law go into effect? Not until January 1, 2024. Wait…
Under this new law (the Corporate Transparency Act) the Government demands answers to some very invasive questions about the leadership of nearly all formed businesses in the United States. This means no more private companies. Yikes…
This is HUGE, but nobody is talking about it! If you’re at risk, then it might not be long until you hear a knock at the door.
You’re at Risk Without a BOI Report
If you own or control at least 25% of a business, or if you just exercise substantial control over a business, then you’re at risk if you don’t file this new Beneficial Ownership Information (BOI) Report.
If your company is a corporation, a limited liability company (LLC), or was otherwise created in the United States by filing a document with a secretary of state or any similar office under the law of a state or Indian Tribe, then you are at risk.
But it isn’t just domestic companies. If your company is a foreign company registered to do business in any U.S. state or Indian tribe, then you are also at risk.
There’s one caveat here. There is a short list of industries who are exempt from having to file this invasive BOI report, including publicly traded companies, nonprofits, and certain large operating companies.
So, if your business is one of these, then you’re safe (for now).
If your business isn’t one of these industries, then the clock is already ticking.
When must you file a BOI Report?
When you must file this new report, which we’ll cover in depth in a minute, depends on when you started your company. If your company was in existence on December 31, 2023, then you have until January 1, 2025, to file this invasive BOI report.
If your company was formed in the year 2024, then you have 90 days to file this BOI report. But if your company is formed on January 1, 2025, or later, then you have just 30 days to file this BOI report.
Also, and here’s the tricky part that many people are missing: If you have already filed your BOI report, but your reported information has changed, then you also only have 30 days to update the government.
With all of that in mind, let’s discuss what actually goes into this invasive BOI report.
What goes into a BOI Report?
Your BOI report must be filed with an agency called FinCEN. That’s the Financial Crimes Enforcement Network. This bureau of nerds under the U.S. Department of Treasury actually included binary code in their logo that spells FinCEN.
When preparing this report for your company, you need to have copies of the passports or state issued driver’s licenses of each person who owns or controls at least 25% of the business, or who exercises substantial control over the business.
Determining everyone who has at least 25% ownership interest is easy to identify, but substantial control is kind of vague. Basically, whoever has the greatest authority over the strategic management of the company should be included on the report. This will likely be your President or CEO.
You need copies of their driver’s licenses or passports because you actually have to submit those copies to the government along with the BOI report.
You’ll also need to include their residence address, date of birth, and identification number.
But wait, there’s more.
Even the person completing the application (like your secretary, treasurer, or HR professional) must include all of that same information and copy of driver’s license or passport, along with the company’s EIN, Tax ID, and state of first formation.
Because the employees who have to fill out this information do not want to provide their private information to the government, that right there is one of the major reasons that companies are outsourcing this filing.
How much does a BOI Report cost?
If you choose to file this document on your own, then FinCEN estimates that it will take you somewhere between 1.5 hours to 10.8 hours.
Yeah, they really nailed that time down, didn’t they?
However, that includes the time necessary to read the law, understand it, gather the information, and complete the BOI report.
The good news though is that there is NO filing fee to submit this BOI report.
The bad news though is that not all companies want to spend 1.5 to 10.8 hours reading the law and completing the BOI report, which is why they are outsourcing it.
I don’t mind them outsourcing since we’ve been getting calls from companies ALL OVER to file their reports.
I’ve heard that some law firms are charging $500.00 to complete this BOI report, which is insane to me since we’re only charging $100.00, (*as of time of publication) and Legal Zoom is charging $149.99.
If you’re looking to outsource this headache too, you should look for someone charging between $100-$200 at the MOST.
And since this is not state specific, you companies in big cities should look to law firms outside the metroplex so you don’t get overcharged.
Education is key
Regardless of whether you choose to tackle this monster on your own, or hire someone to do it, the most important thing is for you to know that it must be done.
It is a travesty that the government pushed out this new law without warning anyone, and it is going to be a tragedy when small business owners start getting jailed for not following this new law.
Meanwhile, the government is going to sit back and mock you by saying, “ignorance of the law is not a defense!”
*cue annoyed face*
–Authored by Matthew L. Harris, Esq.,
Matthew Harris Law, PLLC – Business Law Division
1101 Broadway, Lubbock, Texas, 79401-3303
Tel: (806) 702-4852 | Fax: (800) 985-9479