Editor’s Note: As of December 3, a federal court in Texas temporarily blocked the Treasury Department from enforcing the BOI reporting rules, meaning the agency can’t impose penalties while the court conducts a more thorough review of the rule’s constitutionality.
From an article on the American Rental Association’s website: “Under the Dec. 3 injunction order, reporting companies do not need to comply with the BOI filing requirements; however, the order is not a final decision. Businesses are encouraged to be prepared to comply with the requirements…if they are revived pending further developments in the case or if the injunction is lifted.”
Consult your attorney or business advisor for details on BOI status and how your business may be affected.
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Adding another item to your already full to-do list is less than ideal. However, if you own a corporation or limited liability company (LLC), take a moment to review the requirements and deadlines for filing the Beneficial Ownership Information (BOI) report.
Here’s a roundup of how this new requirement may affect you and your craft business.
What is it?
As part of the Corporate Transparency Act, the United States Treasury Financial Crimes Enforcement Network requires all business owners to file information about their Beneficial Owners: individuals who directly or indirectly own or control a company.
This new reporting requirement is part of the U.S. Government’s efforts “to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.”1
The information you submit is not public; however, certain organizations, including federal and state law enforcement, security agencies, and financial institutions, will have access as needed.
Who needs to file?
You must file the BOI report if your entity is registered as a corporation or a limited liability company (LLC). Additionally, organizations that were created by the filing of a document with a secretary of state or any similar office in the United States are also required to file.
NOTE: Sole proprietorships are generally not required to file a BOI report unless it was created by filing a document with a secretary of state or similar office. The Corporate Mile website explains: “This exemption stems from the nature of sole proprietorships, which do not have a complex ownership structure. Instead, they are owned and operated by a single individual, making them fundamentally different from corporations, LLCs, and partnerships that are typically required to file.”2
Foreign companies that need to file (including corporations and limited liability companies) are those formed under the law of a foreign country that has registered to do business in the United States by the filing of a document with a secretary of state or any similar office.
There are 23 types of corporations and LLCs, listed here, that are exempt from the reporting requirements.
When is the filing deadline?
- If your company was created or registered to do business before January 1, 2024, the filing deadline is January 1, 2025.
- If your company was created or registered to do business in 2024, you have 90 calendar days from the establishment date to file the form.
- If your company is created on or after January 1, 2025, you have 30 calendar days from the establishment date to file the form.
Companies are not required to file a BOI form annually. Rather, the U.S. government states that companies “must file an initial BOI report and updated or corrected BOI reports as needed.”3
What if I don’t file or file late?
Filing the BOI report is not optional, and failure to file will result in steep fines and other civil and criminal charges. The fines for not filing or filing late are up to $500 per day. However, according to the official government BOI website: “If you correct a mistake or omission within 90 days of the deadline for the original report, you may avoid being penalized.”4
How to File
Filing your BOI is done electronically through the U.S. Treasury’s Financial Crimes and Enforcement website located here.
The information you will need to provide includes the beneficial owner’s name, address, date of birth, and acceptable identification number from a license or passport.
Information about the company is also required and includes legal name, trade name, place of business address, tax identification number, and jurisdiction of registration.
The process is fairly straightforward. Most craft business owners we’ve spoken to have been able to file themselves in just a few minutes. Put it on your to-do list so that you can stay compliant!
Resources
If you are required to file the BOI report for your craft business, visit these resources for detailed information, or consult your attorney or business advisor.
Beneficial Ownership Information FAQs
Link to E-File Beneficial Ownership Information Report
What Every Small Business Needs to Know About the Corporate Transparency Act
Paula Wilson
contributor
Paula is a freelance writer and editor with a background in marketing and communications. She is a lifelong maker who especially loves to crochet and quilt. Her latest craft endeavor is learning how to weave on a floor loom. Paula has been published in the New York Times and has written 10 children’s nonfiction books. She lives in Glastonbury, Connecticut.
This requirement has been postponed Nationally by a TX Court ruling
Thank you so much for this update. Readers can learn more about the postponement here: https://www.fincen.gov/boi
From a Dec 6, 2024 Journal of Accountancy article:
A federal district court, finding that the Corporate Transparency Act (CTA) is likely unconstitutional, issued an order Tuesday prohibiting the enforcement of the CTA and the beneficial ownership information (BOI) reporting rule in the CTA’s accompanying regulations.
The injunction, which according to the court should apply nationally, was issued in Texas Top Cop Shop, Inc. vs. Garland, No. 4:24-CV-478 (E.D. Texas 12/3/24).
Under the injunction, the CTA and the BOI reporting rule cannot be enforced, and reporting companies need not comply with the CTA’s Jan. 1, 2025, BOI reporting deadline pending a further order of the court.
The Financial Crimes Enforcement Network (FinCEN), which enforces the CTA, is reviewing the order, a spokesperson said Wednesday, pointing out that other courts have denied similar requests. The Justice Department (DOJ) filed a notice of appeal on Thursday night.
An AICPA statement, released before the DOJ notice of appeal, acknowledged the potential effects of the injunction and urged CPAs assisting clients with BOI reporting to be prepared.
“Under the injunction, FinCEN is barred from enforcing BOI filing requirements while the case is pending,” the statement said. “Best practices dictate that at a minimum those assisting clients with BOI report filings gather the required information from the clients and are prepared to file the BOI report if the injunction is lifted. While it is unlikely that the injunction will be lifted prior to the final outcome of the proceedings, we advise being prepared in the event that there is a reversal.”
I am so happy to hear that this has been called into question! The IRS receives this info annually, so a separate gov’t agency is simply duplication of information.
When I moved to a new location, my lawyer suggested I file to be an LLC to protect personal assets. How that translates to automatic concern for money laundering is beyond my comprehension.
The lawyer recently ‘offered’ to submit the information on my behalf for $1000 and my accountant would take care of it for $250, tells me that this was gov’t overreach and one more layer of hurting small businesses.
I formed my LLC through MyCorporation, and it was through them that I found out about the BOI report. They were charging $159 to file the report on my behalf. I am a single-owner LLC handled as a disregarded entity. In all my research, I never could get a straight answer on whether I had to file a BOIR. Accountants generally don’t do it because there are too many situations where they can be fined, such as if a business owner fails to let them know of changes with the business. My accountant and my attorney both advised me to file and felt that MyCorporation’s fee was reasonable. I filed in September through MyCorporation. This way I feel better that this report was done properly, which is also why I have an accountant for taxes. For what it’s worth, I prefer to be sure.