As a small business owner, you're no stranger to the countless regulations that come your way. But there’s one that you simply can't afford to overlook: Beneficial Ownership Information (BOI) reporting. This requirement, enforced by the Financial Crimes Enforcement Network (FinCEN), mandates that most U.S. businesses disclose detailed information about their beneficial owners.
For many small business owners, BOI reporting may seem like just another piece of red tape. However, the consequences of non-compliance are severe, making it essential to understand why this reporting matters and how to stay on top of it.
In this article, we'll break down what BOI reporting is, why it's important for your business, and how you can stay compliant without getting overwhelmed.
What You Need to Know about BOI Reporting
BOI reporting is a key part of the Corporate Transparency Act, aimed at increasing transparency and cracking down on illegal activities like money laundering and tax evasion.
But what does this mean for your business?
Essentially, it requires you to report detailed information about individuals who own or control at least 25% of your company. This includes their full legal names, addresses, dates of birth, and more.
While the intent of this regulation is to foster transparency, the process of BOI reporting can be challenging for small business owners. The complexity of the requirements, coupled with the strict deadlines for reporting and updating information, means that even a minor oversight could lead to serious consequences.
Why Does BOI Reporting Matter to Small Businesses?
At first glance, BOI reporting might appear straightforward, but the reality is far more complex. FinCEN’s system for BOI reporting is not only intricate but also prone to confusion, leading to a high risk of errors.
The 60-page guide provided by FinCEN is a dense and complicated document, buried deep within their website. Most business owners simply don’t have the time or expertise to navigate these requirements without assistance, which can result in significant mistakes.
However, BOI reporting isn’t something that most small businesses can ignore. Despite the 23 exemptions listed by FinCEN, over 99% of small businesses will still need to file these reports because they do not meet the criteria for exemption. This includes nearly every LLC, corporation, and similar entity in the United States.
If your business falls into this category, BOI reporting is not just another bureaucratic hurdle—it’s a legal obligation that must be taken seriously.
The Ongoing Responsibility of BOI Reporting
BOI reporting is not a one-time task. Once your initial report is filed, the responsibility doesn’t end there.
The Need for Ongoing Monitoring and Updates in BOI Reporting
The CTA requires that any changes to your business’s beneficial ownership information be reported to FinCEN within 30 days of the change. This could include changes in ownership percentages, updates to an owner’s residential address, or even the addition of a new beneficial owner.
Failing to keep your BOI reports up to date can result in severe penalties. The FinCEN system doesn’t provide reminders or alerts for these updates, making it easy for small business owners to overlook these critical changes.
Without continuous monitoring, it’s all too easy to fall out of compliance—something that can cost your business dearly in both fines and reputational damage.
Penalties for Missing BOI Reporting Deadlines
The penalties associated with failing to comply with BOI reporting requirements are harsh.
If you file your report late, or if it contains inaccuracies, your business could face penalties of up to $500 per day until the issue is corrected, with maximum fines reaching $10,000.
In some cases, willful violations could even result in criminal charges, including imprisonment for up to two years.
The Cost of Inaction
These penalties are not just theoretical—they are very real risks that can have a lasting impact on your business. Given the complexity of the reporting requirements and the severe consequences of non-compliance, it’s critical that small business owners approach BOI reporting with the utmost seriousness.
How Patrick Accounting Makes BOI Reporting Easy
At Patrick Accounting, we understand the complexities of BOI reporting and the significant burden it places on small business owners. That’s why we’ve made it our mission to stay ahead of the curve, thoroughly researching the requirements of the CTA and the intricacies of BOI reporting. We know that these regulations can be overwhelming, and we’re here to make the process as seamless as possible for you.
To provide the best possible service to our clients, we’ve partnered with a best-in-class reporting and monitoring system that automates much of the BOI reporting process. This system is designed to minimize the risk of human error so that all reports are accurate, complete, and submitted on time. It also allows us to continuously monitor your business’s information, so we can proactively manage any updates required by law, keeping your business compliant without any added stress.
Proactive Monitoring to Keep You Compliant
Our expertise doesn’t stop at filing reports. We understand the nuances of BOI reporting and the potential enforcement actions that could arise as the legal landscape continues to evolve.
By choosing Patrick Accounting, you’re not just getting a service provider; you’re gaining a partner who is committed to protecting your business from the risks associated with BOI reporting. We take the burden off your shoulders so you can focus on what you do best—running your business.
Don’t Let BOI Reporting Slip Through the Cracks
BOI reporting is a critical requirement that small business owners can't afford to ignore.
The complexities of the process, coupled with the severe penalties for non-compliance, make it essential to approach BOI reporting with care and diligence.
The process may seem complicated, but with the right support, staying compliant doesn’t have to be stressful. Our comprehensive BOI reporting services help your business remain compliant, protected, and positioned for success.
Don’t wait until it’s too late—reach out to Patrick Accounting today to learn more about how we can help you stay on top of your BOI reporting obligations and protect your business from unnecessary risks.
