Running any business comes with a small mountain of paperwork. There’s all the documentation you need to file at founding. You need to manage your annual filings with the IRS and applicable state tax authorities. You need to periodically renew registrations, licenses, etc. And now, to top it all off, businesses might have another piece of paperwork to deal with: the beneficial ownership information (BOI) filing.
If paperwork is one of your least favorite parts of running a business, you’ll be glad to know two things. First, the BOI reporting requirement is a one-and-done thing. You file it once and you’re not required to refile again unless something substantial changes at your business.
Secondly, you don’t need to worry about this right now. While the BOI requirement was set to go into effect on January 1, 2024, with a December 31, 2024 deadline, it ran into some legal trouble. There’s currently an injunction blocking the reporting deadline for BOI submissions. That means you’re not required to deal with this paperwork (yet).
A quick recap: What is BOI?
Before we get into the shifting requirements and what their current legal process will likely mean for business owners, let’s start with the basics. What is BOI?
Beneficial ownership information is what it sounds like: information that businesses need to report about anyone who substantially benefits from the company. This requirement was put into motion by the Financial Crimes Enforcement Network (FinCEN). The goal is to ferret out unsavory players who might be hiding behind the scenes and profiting from U.S. businesses or driving them in directions that could compromise the market or even national security.
The BOI reporting requirement means submitting a fairly straightforward form. That said, that form needs to be filed for every individual in the company who exercises substantial control over the company or owns or controls at least 25% of the company.
For each beneficial owner, companies need to submit the form with their individual information. If you have that info on hand, it should only take about 5–15 minutes to complete. And the filing is free.
Still, a lot of business owners found this additional bit of paperwork burdensome. Under the 2024 rollout of this requirement, they had until December 31, 2024, to file. But they were saved at the eleventh hour.
Learn more about the BOI reporting requirements
To get more info about this to-do — including what constitutes “substantial control” and when your business might be exempt from the requirement — we have a few resources. First, we have a quick-start guide on the topic. If you’re ready to do a deeper dive, the FinCEN Small Entity Compliance Guide is a valuable tool.
BOI requirements are currently on hold
With the reporting deadline fast approaching at the end of 2024, a legal battle kicked into gear. In early December, a Texas judge issued a nationwide injunction blocking BOI requirements from going into effect. The judge ruled that the Corporate Transparency Act (CTA), which BOI reporting falls under, was “likely unconstitutional.”
(This wasn’t the first time the BOI requirement ran into trouble. An Alabama judge also marked it as potentially unconstitutional in March 2024, but didn’t go as far as issuing an injunction that applied nationally.)
The Department of Justice (DOJ) appealed the Texas judge’s national decision, and a panel lifted the injunction.
But that didn’t last.
A federal court of appeals reinstated the injunction blocking the deadline. That went into effect on December 26, 2024, a belated Christmas gift to any business owner scrambling to make the end-of-year deadline.
As it now stands, the CTA is unenforceable and, as a result, the BOI reporting requirement doesn’t apply.
It doesn’t mean, however, that BOI reporting is going out the window. The issue is still under judicial review. On New Year’s Eve 2024, the DOJ filed an emergency application with the Supreme Court on the issue.
The DOJ has made an attempt to lay out a compelling case for the constitutionality of the CTA and BOI reporting requirements. Whether judicial authorities will agree and stay the injunction remains to be seen.
What to do: Stay informed and be prepared
When, then, does all of this mean for business owners across the U.S.? First, you should stay abreast of the situation. Keep an eye on the news so you know where things currently stand with this requirement.
In the meantime, take some steps to get ready if the injunction gets lifted. Experts recommend being prepared to submit your BOI filing. It’s not unlikely that the DOJ will succeed, the CTA will be deemed constitutional and enforceable, and businesses will need to file their BOI reports.
That’s why a lot of authorities on the matter recommend being prepared. The Association of International Certified Professional Accountants (AICPA), for example, “advises gathering required information and being ready to file if the injunction is lifted.”
You could even file the report voluntarily now. Once you have the information gathered, the actual paperwork only takes a handful of minutes and can be completed online. It’s also free. FinCEN has a five-minute video that walks you through the process, too. Handling that now would mean you don’t have to stress if the injunction is lifted because you would already be in compliance.
Looking ahead
Clearly, the BOI reporting requirement is a moving target right now. As groups battle it out legally, business owners are currently free from the obligation to file this additional bit of paperwork. But if the DOJ wins — something that’s very possible — these requirements will snap back into place.
There will likely be a new starting deadline, but it may be fairly quick. When this requirement was enforceable, newly founded businesses only had 90 days to submit their BOI report.
In other words, you can breathe a sigh of relief now but don’t just rest on your haunches. At the very least, you should take a look at what you’ll need to file your company’s BOI report. That means identifying beneficial owners and gathering the required information for each of them.
We can help here. If you have questions about who might be a beneficial owner or other details about this potential reporting requirement, feel free to reach out to our team.
