I help entrepreneurs leapfrog over the typical potholes that derail most small businesses with inspiration, motivation, education, and support across a wide range of business topics drawn from over a decade of running my own business, teaching entrepreneurship for the City of New York, and coaching and consulting privately with dozens of women and minority small business owners. Honestly, why go it alone when help is an email away?
New Rule
I don't know about you, but August is always something of a tough month for me.
Although we're deep into the dog days of summer and I'm still happily planning my beach reads and day trips, my brain is getting ready for the onslaught of busy-ness that hits as soon as the sun sets on Labor Day.
Case in point, this morning I woke up thinking about a new rule for small business owners registered in the US, whether domestic or foreign, that goes into effect on January 1, 2024 and that hardly any of us has heard about.
In fact, it's just by luck I came across a mention of it just a couple of weeks ago.
It's called Beneficial Ownership Information (BOI) reporting.
BOI was enacted last fall by the Financial Crimes Enforcement Network (FinCEN) of the US Treasury Department in keeping with The Corporate Transparency Act passed by Congress in 2021.
This new regulation is meant to take a bite out of financial crimes like money laundering, funding of terrorism, and other 'dark money' and illicit activities.
It requires every business that has registered with a secretary of state or similar office to report identifying information about the individuals who directly or indirectly own or control the company.
Here are some things you should know about the new regulation:
- If you own a corporation, S-corp, or LLC/LLP, you are likely required to comply with the BOI regulation. Generally speaking, if you're structured as a sole proprietorship, you're probably not affected, but you'll want to check with an expert to ensure you're in the clear.
- The rules differ based on when your business was/is established, namely by Dec. 31st, 2023 or after. Generally speaking, if it's by end-of-year, you'll have a full year to comply, which is very good news.
- Failure to comply will result in steep fines. (And I do mean STEEP!)
- There's no required government fee connected to compliance, but service providers (like CPAs and tax preparers) supporting your compliance will likely charge additional fees.
Like any government regulation, the rules around BOI aren't straight-forward.
And, since it's new, there's still some details to be worked out. For instance, the government is still developing the online platform by which companies will submit the required forms and documentation.
At least one vocal group, The American Institute of CPAs® and The Chartered Institute of Management Accountants® (the AICPA/CIMA) is advocating to delay implementation in part due to the lack of education and infrastructure surrounding the new regulation.
So, stay tuned as this may be like the new Third-party Payment Settlement Options (TPSO) tax reporting I wrote about earlier this year, which was meant to begin in tax year 2022 but was push to begin this tax year. (See Code-d Messages to learn more about this tax code change.)
To learn more about BIO reporting, here's the FinCEN_BOI-FAQ PDF or download it here. You can also check out the AICPA/CIMA online resource center.
While I absolutely do not want you worrying about this (and ruining the rest of your summer over it), I do want you to be aware so you can adequately prepare.
Have questions about business, taxes, or something related? Drop me a line and I'll do my best to get you an answer or cover it in an upcoming email.
Until next week,
PS - In case you missed it, last week it was All in the Family.
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I help entrepreneurs leapfrog over the typical potholes that derail most small businesses with inspiration, motivation, education, and support across a wide range of business topics drawn from over a decade of running my own business, teaching entrepreneurship for the City of New York, and coaching and consulting privately with dozens of women and minority small business owners. Honestly, why go it alone when help is an email away?
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