New Federal Reporting Rule for Businesses

New Federal Reporting Rule for Businesses

What’s all the hubbub about the new FinCEN requirement next year? FinCEN is a new federal reporting rule for businesses and it’s something you need to know about because it could cost you upwards of $500 or even jail time. Yikes! Here’s what you need to know and how your business plays a role in this new rule. 

 

 

 

 

This post will cover the basics of the new reporting rule and it’ll also separate the facts from the myths so you know exactly what to expect. Scammers are always ready to pounce, so beware of those scams when it comes to reporting this coming year. With that being said, this info will be able to help you file without getting scammed! 

 

Disclaimer: What kind of attorney would I be if this didn’t have a disclaimer? I’m a licensed attorney and I practice in Utah and Idaho. I am not your attorney. This is not official legal advice. If you have any questions, please consult with a legal professional in your jurisdiction.

 

 

 

 

New Federal Reporting Rule for Businesses 

Next year, there is a new corporate transparency act that requires a new BOI (Business Owner Information) report from all established companies. This means that if you’ve taken the steps to formally register your business as an LLC, S-Corp, or C-Corp, then you are likely subject to this new reporting requirement. 

 

The reason the government wants this information is to allegedly help prevent financial crimes and gain more transparency with those who are handling money as it moves through different companies. This act will help tighten up money trading and uncover businesses who are doing shady things with money. 

 

This is a lot of lawyer talk, but I don’t want you to worry. This new rule is not a big deal as long as you fit the requirements and take action in the right timeframe. 

 

 

What You Need to Do for the New FinCEN Rule

As of January 1, 2024, if you have an existing LLC or corporation then you need to file your BOI report at fincen.gov. You will need to provide things like your legal name, date of birth, your residential and business address, and some form of government ID. You will also need to provide your EIN or your tax identification number. 

 

 

How to Know if You Need to Fill Out the Form

If you are the beneficial owner of the company, meaning you have more than 25% control in the decision making of the business, then you will most likely need to file your BOI. If you are a silent investor of the company and don’t have a lot of control in the day-to-day decisions, you probably do not have to fill out the FinCEN requirement. 

 

However, those who do not file this requirement who need to can face a fine of $500 a day or jail time for up to two years. I don’t think the government will be going after a lot of small businesses right away, but I still recommend filing your BOI so there’s no unnecessary fines or paperwork in your business down the road. 

 

 

 

 

How Long You Have to Report Your BOI

The ability to file your BOI begins on January 1, 2024, and ends on January 1, 2025. You have an entire year to get your information reported on the fincen website. However, I do not recommend waiting until the end of the deadline. Not a good strategy! Get it done as soon as you can, especially if you need to coordinate with other people to get the required information. 

 

 

What to Do If You Plan to Create an LLC in the New Year

If you do not have an LLC. but have plans to create one in the new year (2024), you will have 90 days to report your BOI from the date your business becomes an official LLC or corporation. If you end up registering your business in the following year, 2025, you will have a shorter window of only 30 days to report your BOI. 

 

If you want some extra help with registering your business as an official LLC, check out my posts HERE! I share tips on how to save the most money when setting it up and the process that will be the easiest for you from start to finish. 

 

 

 

 

4 Myths about the New Federal Reporting Rule

 

Myth #1: Every business owner needs to file a BOI to the FinCEN. 

If you are not a majority owner of the business, you may not need to file. If you are a sole proprietor or DBA you will not need to file this. Depending on what type of business owner you are, that will determine if you need to file. As mentioned before, if you are one who has more than 25% control of the business, you are likely subject to reporting. 

 

Myth #2: You have to give super-secret information to the government. 

The information required is not weird or too personal. It’s really normal information that you would also give to Stripe or Shopify to set up your payment processing information. The only people who will be able to access this information are government and law enforcement agencies. 

 

Myth #3: You should pay someone to file the report for you.

You absolutely do not have to pay someone to fill out this form for you. If you want to spend your money this way, go for it, but this is something that can be easily done on your own. Reporting the information is free, easy to access, and is a simple process. Save your money for more important things. 

 

Myth #4: You must file immediately or else you will be fined. 

We already talked about this one, but let’s go over it again since there are some rumors going around about it. If you are an existing LLC you have an entire year (Jan. 1, 2024-Jan. 1, 2025) to file your BOI. If you are a new LLC you will have 90 days from the certification date if you register in 2024 and 30 days from the certification date if you register in 2025. 

 

 

 

 

New Federal Reporting Rule for Businesses 

I hope this post about this new federal reporting rule for businesses was helpful to you. Let’s get on track this coming year and make it our best one yet, starting with filling out this FinCEN form. If you want more guidance for your business, check out my free guide HERE which will give you a rundown of what should be on your business checklist for the new year. Also, make sure you’re following me on Instagram @brittanyratelle so you can keep getting the latest tips and updates on keeping your business legally legit! 

 

 

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