Maximize Savings and Simplify BOI Reporting with TaxBandits’ Solution for Small Businesses

An overview of the estimated costs for BOI reporting, and how TaxBandits can help your small business save!

Small Business BOI reporting

There’s a lot of buzz surrounding the BOI reporting requirements right now, particularly for small businesses. Small business owners have a wide array of questions, from “Does my business need to submit a BOI Report?” to “How much is this going to cost me?”

At TaxBandits, we understand that as a small business, your time is valuable, and minimizing expenses is a priority. That’s why we’re constantly seeking new opportunities to address your needs, whether it’s filing IRS information returns or navigating the new BOI reporting requirements from FinCEN.

In this blog, we’ll cover the basics of BOI reporting, with a focus on addressing the costs and time involved in the process. Additionally, we’ll share our solutions for maximizing your budget and saving valuable time because, ultimately, both are best spent on running your business effectively.

What is BOI Reporting and Who Does it Affect? 

The Corporate Transparency Act, effective from the 2024 tax year, mandates that all small companies file their Beneficial Ownership Information (BOI) Report with the Financial Crime Enforcement Network (FinCEN). This provides insight into individuals with significant control over these businesses and aids in preventing financial crimes.

FinCEN estimates that over 30 million businesses will be affected by this new reporting requirement. 

Typically, companies that are required to report beneficial ownership information are called ‘Reporting Companies’. Per the FinCEN guidelines, reporting companies should submit BOI reports. Reporting companies can be classified into two categories:

  • Domestic reporting companies are entities registered in the United States by filing with a secretary of state or any equivalent office. Some common examples of this would be a limited liability company (LLC), or a corporation. 
  • Foreign reporting companies are entities formed under the law of a foreign country that have registered to do business by filing with a secretary of state or any equivalent office. The key difference is that this business entity was not originally formed in the U.S. 

If your business falls into either category, it likely needs to report Beneficial Ownership Information. However, there’s a reporting rule that exempts 23 specific types of business entities from these filing requirements. For a comprehensive overview of these exemptions and more, refer to the BOI Small Entity Compliance Guide, issued by FinCEN.

To give some clarity into how big the reach of BOI reporting will be, here are some numbers released in a notice from the Federal Registry on BOI reporting requirements. 

It is estimated that upwards of 32.6 million reporting companies will be affected by the new requirement in its first year (2024). In the following 10 years, an additional 5 million reporting companies are predicted to be affected each year.

How Long Can the BOI Reporting Process Take?

There has been some debate over this, however, based on this notice from the IRS treasury, the best answer is that this can vary. How long the reporting process will take ultimately depends on how complex the structure of the reporting company is. Based on this notice from the Federal Registry, we can ascertain the following: 

An initial BOI report can take an estimated 90 minutes to gather the required information and complete. While additional reports made in the future to correct the original, or document changes to the organizational structure can take about 30 minutes. 

Keep in mind that this estimate can vary based on the complexity of the organizational structure and whether you choose to file yourself or hire a professional who charges by the hour or for specific services.

What are the Estimated Costs for BOI Reporting?

Again, this is an estimate provided by FinCEN in the same notice from the Federal Registry. Note that the costs mentioned below are based on the average wage rate of $56.76 for specialized administrative professionals. This is a typical rate, but actual charges may vary. 

For a reporting company with a simple structure:

It is estimated that the responsible party will need about 90 minutes to review the reporting requirements, gather the necessary information, and file the report. If no professional consultation is needed, this process will cost the reporting company approximately $85.00.

For a reporting company with a moderately complex structure:

As the structure becomes more complex, so does the reporting process and the time needed to gather the information. FinCEN estimates that the initial process will take about 370 minutes, or roughly 6 administrative hours. 

Consulting a professional may result in an estimated cost of $1,000. The total estimated cost of this process is approximately $1,350.00.

For a reporting company with a complex structure:

For a reporting company with a complex structure, FinCEN estimates that about 4.9% of reporting companies fall into this category. The estimated administrative time is 650 minutes, or nearly 11 hours. Consulting a professional may cost up to $2,000, making the total estimated cost approximately $2,614.87.

*Note: These estimates don’t include the need for future corrected and updated reports. 

How Does TaxBandits Streamline Costs and Efficiency?

At TaxBandits, we understand the stress small business owners feel about the new BOI reporting requirements. Just like with the IRS tax forms we offer, our goal is to provide an easy and affordable solution, allowing businesses to focus on what matters most—running their operations.

To support small business owners, we’ve created a pricing model that offers a simple and confident reporting solution. Here is a look at our tiered pricing structure:

To put this in context, for business owners filing for 1-5 EINs (businesses), the cost is structured as follows:

  • $49.00 for an initial report
  • $99.00 to include any updated or corrected reports during the next year
  • $199.00 to cover any updated or corrected reports for the entire lifetime of your business

Plus, you can submit updated or corrected reports for free within 7 days following the submission of your initial report.

Additional Benefits of Filing BOI Reports with TaxBandits

While there is a free option to file BOI reports through FinCEN, TaxBandits offers clear benefits that business owners can appreciate throughout the lifetime of their business. If you’ve filed with TaxBandits in the past, you’ll know that the filing flow is simple and filled with guidance throughout the process. 

We have applied the same approach to our new BOI reporting solution! The TaxBandits application guides you through the report, providing instructions and helpful information to ensure you complete the form easily and accurately.

You can also eliminate the need to enter information manually multiple times by pulling business information directly from your TaxBandits Address Book when creating a report.

When it comes to corrections and updates, unlike a free solution, you won’t need to start from scratch. Simply update or correct the information in your initial report and submit the update to FinCEN.

Last but not least, TaxBandits offers a robust solution for recordkeeping. All the BOI reports you submit to FinCEN will be available in your account for years to come. This is a significant benefit considering the many changes a business can undergo over its lifetime. Whether there is a change in ownership or management, this information won’t be lost. In the case of an audit, you’ll have easy access to the documentation you need!

Ready to begin the BOI reporting process with TaxBandits? Just create a free account and begin the process today!

tax year 2023 e-filing

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