What Small Business Owners Need to Know About BOI Reporting in 2024
October 24, 2024
Starting January 1, 2024, many U.S. businesses will be required to report Beneficial Ownership Information (BOI) to the federal government as part of the Corporate Transparency Act (CTA). This new regulation aims to prevent illegal activities like money laundering by increasing transparency about who controls companies. For small business owners, particularly those with limited liability companies (LLCs), corporations, and partnerships, it’s crucial to understand the requirements and deadlines to avoid penalties.
Who Needs to Report?
The BOI reporting rule applies to a wide range of business entities formed in the U.S. or registered to do business here. Most small businesses—including LLCs, corporations (both S and C), and certain partnerships—are subject to this requirement. Sole proprietors and other businesses without a separate legal entity may not need to report, but it’s essential to check whether your business qualifies for any exemptions.
Exemptions exist for businesses already regulated by the government, such as large publicly traded companies, banks, and certain tax-exempt entities. However, if you own or operate a small business not covered by these exemptions, you’ll likely need to comply.
What Information Do You Need to Report?
BOI reporting involves providing detailed information about the company and its beneficial owners. A “beneficial owner” is anyone who owns 25% or more of the company or has significant control over it.
This includes:
- Full legal names of the beneficial owners
- Date of birth
- Residential or business address
- Unique identification numbers (e.g., driver’s license or passport numbers)
For each company, the report will also require details such as the company’s name, address, and jurisdiction where it was formed or registered.
Key Deadlines
New businesses formed after January 1, 2024, will need to file a BOI report within 30 days of their formation or registration. For existing businesses (those formed before January 1, 2024), the deadline to submit a BOI report is January 1, 2025.
Failing to file the report on time, or submitting inaccurate information, can result in serious consequences. Civil penalties of up to $500 per day for non-compliance, and even criminal charges in extreme cases, underscore the importance of staying on top of this new reporting requirement.
How to Stay Compliant
Filing BOI reports is done electronically through a federal system, but understanding how to gather and report the necessary information correctly can be complicated, especially for small business owners without a dedicated compliance team.
This is where Redwood Credit Union can help. Our partners at Paychex®* offer services designed to help businesses navigate new regulations like BOI reporting. Paychex provides comprehensive compliance support to ensure your business meets all necessary requirements, saving you time and helping you avoid costly penalties.
The new BOI reporting requirements are a critical change for small business owners to be aware of. By understanding the rules and staying compliant, you’ll be able to focus on running your business without the worry of penalties. With Redwood Credit Union and Paychex in your corner, navigating these changes can be a lot easier.
Payroll is just one of the many services provided by our partners at Paychex. To schedule an appointment with a Paychex representative to discuss BOI reporting, click here.
*Redwood Credit Union partners with Paychex® to provide payroll, tax, and government compliance services for our small business Members. Paychex is a registered trademark of Paychex, Inc.
PPP Forgiveness Application Deadline
Congress passed The Economic Aid Act which changed the deferment period from 6 months post covered period to 10 months post covered period. For example, if your covered period ended June 30, 2021, under the new guidelines the earliest your first loan payment wouldn’t be due until April 2022, and you have until then to request forgiveness. Please use the following calculation to help you identify when your forgiveness will be due:
- PPP borrowers may select a covered period anywhere from 8 weeks to 24 weeks.
- RCU is automatically calculating your loan due date based on a 24-week covered period, if you intend on using a shorter covered period please inform us immediately as this will impact your due date.
- Your correct deadline will be reflected in your online banking account.
If all or part of your PPP loan is not forgiven, your first loan payment will be due the first of the following month after a decision is made by the SBA.
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