Last week we bit the bullet of compliance and filed the ownership reports now required under the Corporate Transparency Act (CTA). Here’s what you need to know.
Like most small business owners and real estate note investors, we balked at the invasion of privacy and yet another level of bureaucracy. Realistically, the government already has access to this information if you file taxes. And surprisingly, the filing process wasn’t that hard or time-consuming.
We had two entities that required filing – one existing and one new. Each needed its own Beneficial Ownership Information Report (BOIR). The existing corporation took about 8 minutes and the new LLC took about 10 minutes.
Ready to check this off your to do list? We’ll share some helpful time-saving tips we discovered before and during the process.
What is the Corporate Transparency Act (CTA) BOI Filing?
Starting January 1, 2024 many companies doing business in the US must report personal information on individuals that own or substantially control that company to the Financial Crimes Enforcement Network (FinCEN).
The BOI E-Filing System supports the electronic filing of the Beneficial Ownership Information Report (BOIR) under the Corporate Transparency Act (CTA).
Who Needs to File?
You likely need to report if you are a corporation, a limited liability company (LLC), or were created by filing a document with a secretary of state or any similar office under the law of a state or Indian tribe. This also applies to a foreign company that was registered to do business in any U.S. state or Indian tribe by such a filing.
There are about 23 types of entities that are exempt. If you want the full details on exemptions, beneficial owners, and substantial control, there’s a list of frequently asked questions on the FinCEN website. Link: https://fincen.gov/boi-faqs
Is this ‘Optional?’
The short answer is that if you fall into the required categories, no, it is not optional. Matter of fact, it comes with some pretty hefty penalties if you don’t.
When to File the CTA BOI Information
If you have an existing entity (created prior to 2024) you have until the end of 2024 to file. If you have a new entity, (created in 2024) you must file within 90 days of creation.
That window shortens to 30 days for companies created in 2025. The 30-day window also applies to any changes going forward (more on that later).
Our existing entity was incorporated back in 1998 so we had plenty of time. Rather than file right away, we purposely decided to wait until Fall.
Why? We hoped the kinks would get worked out of the system by then.
We also wanted to file early enough to avoid any rush from last-minute end-of-year filers. That kind of traffic volume has the potential to cripple the website.
Finally, we were “not so secretly” hoping some of the lawsuits filed against the CTA might somehow exempt, delay, or provide relief from the filing requirements. The most notable being the National Small Business Association (NSBA) suit which claims requiring US residents to report sensitive personal information is a violation of their constitutional rights. Unfortunately, that’s under appeal and is limited in its application.
We felt the time had come to proceed with filing on both entities (existing and new) to stay in compliance, meet the deadlines, and avoid the end of year rush.
Where to File Your Corporate Transparency Act (CTA) BOI Information
It does not cost to file the report yourself. This is the official page to file your BOI online: https://boiefiling.fincen.gov/fileboir
You’ll see services offering to do this for you. The going rates seems to be $150 – $200 per filing. We decided to file direct and go out to a nice dinner.
Just be very sure you are on the official site or working with a reputable provider. Beware, there are a lot of scams and fraudsters out there.
How to Prepare Before You File
My first stop was the Fincen.gov website. There’s a short 5-minute video on this page that was a helpful walkthrough. You can find that here: https://fincen.gov/boi
We also decided to purchase identity theft insurance prior to filing. We’ve been closely following the information shared by Attorney Jeff Watson over at WatsonInvested.com. One suggestion from Jeff was to consider acquiring identity theft protection. We’d pursued off and over the years (usually when it was offered free as part of a settlement for some prior security breach).
It pains me to pay even one more dollar in insurance. I’d say, “don’t get me started,” but I am already going there. Between self-employed health insurance rates and Florida home/auto rates, insurance is already the biggest monthly expense we have that is outside of our control (beyond raising deductibles and self-paying for minor expenses over filing claims).
In this case we opted to go with LifeLock by Norton. They were offering 50% off for the Ultimate Plus Annual Family Plan and backed it up with sizable insurance. There are others out there and would like to know any preferences from other note investors.
So, add $395 in identity theft insurance to my tally of rants on insurance this year. Next year it renews at $679. We’ll see if we keep it or whether they offer us a discount to continue. For now, we have identity theft insurance. As an aside, that took longer to setup and was more intrusive than filing the report itself.
Information Needed for BOI Filing
The application has five sections with a series of questions under filing Information, reporting company, company applicant, beneficial owner, and the final sign and submit tab.
The information includes:
- Company Name and Mailing Address
- Tax ID for Reporting Company (usually an EIN)
- Personal Info of Beneficial Owners – includes residential address, birth date, and a copy of their driver’s license, state id, or passport. *This is where you start to get that uneasy feeling. It can also be a hassle to gather copies of ID if you have multiple beneficial owners.
- Personal Info of Applicant – same personal info and id for the applicant needed IF the company formed January 1, 2024 or after.
Tips for Your CTA BOI Filing
You can preview all fields and scroll through the 5 tabs without entering any information. I wish I had known that up front. It makes it easier knowing what comes next.
If you have many entities to file, you may first want to obtain a FinCEN ID number for the applicants and beneficial owners. This can save time across multiple filings. It is not a requirement and we didn’t use. We did check the box to assign a FinCEN ID to our company on Box #3
Be sure to check Box #16 if you are filing for an existing company formed prior to January 1, 2024. This will keep you from entering all the information under Company Applicant in Part II. That means you get to skip Questions 18-33. That’s why the new entity took more time to complete.
If you have more than one Beneficial Owner in Part III, you need to fill in information for the first one and then go to the top and select the blue “Add Beneficial Owner” button. That will let you keep adding an owner as needed. If you hit “Next” at the bottom of the page after adding just one (like I did), be sure to go back to the top and add more with that blue button. You can also remove if you get click happy and add to many.
What Happens Next?
Once you submit the report you go to a confirmation page showing the filing was successful. Be sure to print or save that page. A confirmation email was also received within minutes.
You are entitled to sigh loudly and pour your favorite adult beverage (for me that was a glass of wine).
But don’t get too comfortable. If there are any changes, you must file an update within 30 days. While there is no annual filing requirement, the company must file an updated BOI Report whenever there is a change in its basic information, beneficial owners, or status as a reporting company.
There are hefty penalties for violations. A person who willingly violates the reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues, along with possible criminal penalties, imprisonment, and a criminal fine up to $10,000.
You’ll also need to factor in inflation. That daily amount of $500 is adjusted annually for inflation and, at the time of publication, was already at $591 per day per the official website.
Plus, there’s still a bit of unknown surrounding the new requirements. That was evident right in the form. Both questions 17 and 34 are unused and state: “This Item Reserved for Future Use.” Did anyone else notice and wonder what that’s all about?
In summary, after almost a year of hearing, discussing, and griping about the looming Corporate Transparency Act (CTA) headache, the actual BOIR filing wasn’t that hard or time-consuming. It doesn’t mean we like it, but at least it is done—for now.
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Another possibility is that you could freeze your credit on Equifax, Transunion and Experian. That is free.
Appreciate the info guys. While I have not obtained Identity theft insurance,as of yet I’ve learned through another mentor Merrill Chandler (Getfundable.com) that having a subscription to MYfico.com is very useful in getting notifications re: your credit profile, updated scores and anytime anyone tries to do anything with your credit profile, real time up to date and you get a quarterly report to go over to see if any changes have been made to your profile. mnthly rate is $29.99 and I’ve had it about 3 yrs now. I feel its one of the most useful tools out there to keep your identity/credit profile up to date and lets you know immediately if something comes up.