Tackling the BOIR for Your Business with Expert Advice from CPA Jason Ackerman
You might be familiar with the team at TaxBandits, but did you know their parent company, SPAN Enterprises, hosts its own podcast, The Bandit Room?
On The Bandit Room, you’ll find the latest updates, from local news in Rock Hill to insights relevant to small business owners everywhere.
In this special episode, our host Charles teams up with Jason Ackerman, a CPA and CGMA from BNA CPA. Jason sheds light on a crucial new requirement for businesses under the Corporate Transparency Act, offering his insights on the BOI reporting requirement from FinCEN and strategies for successfully tackling this new mandate.
Understanding the Corporate Transparency Act
Jason begins by explaining the origins of the Corporate Transparency Act, which was passed a few years ago to prevent money laundering and to identify the true owners of businesses operating within the United States. While not all businesses are affected, the act imposes a new filing requirement for many, necessitating the disclosure of beneficial ownership.
“The federal government doesn’t know who owns all these entities,” Jason states. “They’re trying to prevent money laundering and foreign companies from moving money through the U.S. without oversight.”
Who Needs to Comply?
Most businesses, including single-member LLCs, are required to comply with the new filing regulations. “Anyone can set up an LLC pretty easily,” Jason notes, “but the federal government has no idea who owns these entities since it’s a state-controlled process.”
For businesses established before January 1, 2024, the deadline to file a Beneficial Ownership Information (BOI) report is December 31, 2024. For those established after January 1, 2024, the BOI report must be filed within 90 days of formation.
The Penalties for Non-Compliance
Jason emphasizes the importance of compliance, citing significant penalties for those who fail to file accurately. Penalties can reach $500 per day, up to a maximum of $10,000, with potential imprisonment for up to two years.”I don’t look good in orange,” Jason jokes, underscoring the seriousness of the consequences.
Filing Requirements and Exemptions
The act primarily affects smaller businesses, as larger entities with over $5 million in sales and 20 employees are generally exempt. Other exemptions include publicly traded companies and non-profits, among others. However, most small businesses will need to comply.
Jason points out that once a BOI report is filed, any changes must be reported within 30 days. This includes changes in beneficial ownership or address updates. “Ownership doesn’t often change,” Jason says, “but address changes are more common.”
Beneficial Ownership and Community Property States
The concept of beneficial ownership can be complex, especially for businesses with multiple owners. Beneficial owners are defined as individuals with more than 25% ownership or significant control over the entity. In states with community property laws, such as California and Louisiana, spouses may also need to be listed as beneficial owners.
Navigating the Filing Process
For those feeling overwhelmed by the filing requirements, Jason advises seeking professional assistance. “If you’re confused, hire someone like me,” he says. “We are more familiar with the laws and can help ensure compliance.”
TaxBandits, the first to integrate directly with FinCEN, offers a user-friendly platform to facilitate the filing process. Jason praises the service, noting that it simplifies the process for business owners who are not CPAs.
Conclusion
In summary, the Corporate Transparency Act introduces new filing requirements for many businesses, aimed at increasing transparency and preventing financial crimes. Compliance is crucial, given the severe penalties for non-compliance.
For those needing assistance, services like TaxBandits provide a streamlined solution to meet these new obligations. Stay compliant and avoid hefty penalties by understanding and adhering to the new regulations. For more expert advice that is specific to your own business, remember it is always best practice to consult with professionals like Jason Ackerman!
To watch the entire episode over on YouTube, click here! For more small business insights from your friends at The Bandit Room, check them out on Spotify, Apple Podcasts, or wherever you listen!
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