Main Street Business

#564 The BOI is Back! 99% of Small Business Owners Must File By March 19th

• Mark J Kohler and Mat Sorensen

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In this episode of the Main Street Business Podcast, Mark J. Kohler and Mat Sorensen explain FinCEN’s BOI requirement and what it means for LLCs and corporations. With compliance deadlines approaching fast, they provide expert guidance on how to file properly and avoid costly fines.

Here are some of the highlights:

  • Mark and Mat discuss the recent developments, including the overturning of a previous injunction and the reinstatement of BOI enforcement by FinCEN.
  • Mat provides the new deadline for filing the BOI in 2025.
  • Mat details the information required for the BOI, including the name of the business, tax ID, EIN, and the names and home addresses of owners and those with substantial control.
  • Importance of listing all owners, including those who own 25% or more and those with control through trusts or other entities.
  • Context of the policy behind the BOI, aiming to prevent money laundering and other illegal activities by requiring transparency in business ownership.
  • The process of filing the BOI through the FinCEN website or using their law firm's services, which can help simplify the process.
  • Discussion on the exceptions to filing the BOI, including entities with more than 25 employees or $5 million in revenue.
  • Mark and Mat strongly urge filing even if the entity has not been active, as non-use does not exempt the requirement.
Speaker 1:

Welcome to the Main Street Business Podcast with your distinguished hosts, mark J Kohler and Matt Sorenson. Both are best-selling authors and have over 25 years of industry experience, with 10,000 client consultations, making them the leading tax and legal experts in the nation. Together, they'll unpack the most complex tax, legal and financial strategies crucial for saving more, stressing less and building generational wealth. Today they're your personal advisors, ready to break it down for you and make the tax and legal game easier than ever. Here is Mark and Matt.

Speaker 3:

BOIs are back and you've got 30 days to comply 99% of you of the owners of an LLC or a corporation in America as a small business owner have to file this report.

Speaker 2:

It's over 500 bucks a day for failure to file. I know a lot of people are like I'm just going to wait till that Supreme Court case and see if it gets overturned. You're going to have penalties. I mean, you're rolling dice, I'm not using it now. That business didn't go well, or I bought a rental and I sold it. There's nothing wrong.

Speaker 3:

I still got to file it. Yep, too late. There's a requirement you have to file. Welcome everybody to the Main Street Business Podcast breaking news. The BOI is back on the table. We're talking about it again. It may be here to stay. I cannot deal with this, matt.

Speaker 2:

Well, we're on the fourth hump in the roller coaster here of what's going on. So if you've had a little whiplash, you're not alone. But what's going on right now is FinCEN just issued a notice out today stating that BOIs are back and you've got 30 days to comply. We're going to dig into that Now. Here's why. The latest case that got overturned was this case called Smith versus Department of Treasury. This was a federal district court case in Texas. Now, a lot of you might have remembered the Top Cop Shop case that went all the way to the US Supreme Court and that one the US Supreme Court overturned and said BOIs are legal. Right now we're not putting this injunction in place. But there's this other case, smith versus Department of Treasury, sitting down in Texas, that still had an injunction in place. That injunction was just lifted yesterday. So now FinCEN came out and said there are no more orders preventing us from enforcing the BOI anymore. We're back. You need to file the BOI.

Speaker 3:

All right, and what does this mean? Some of you might be thinking what the hell are you talking about? Okay, the BOI is called the Business Owner Information Report. It is being enforced by FinCEN, which is the Financial Crimes Enforcement Network, which is the sister to the IRS, if you will, or the brother. I'm not sure if it's a sister or brother.

Speaker 3:

Now, if you're a business owner with an LLC or a corporation, 99% of you we're going to talk about this a little bit more for a moment but 99% of you of the owners of an LLC or a corporation in America, as a small business owner, have to file this report. Now, it's not hard. It's a little invasive, privacy wise for many of you. You're going to hate it maybe, but we've been helping our clients file this over the last six months. Essentially, people were preparing to do this when the first deadline was the end of the year, and then it was on and off because different people have been suing the government saying I don't want to do this, so it's back on. It is required. And when's the deadline, matt, that business owners must?

Speaker 2:

file this. Yeah, the new deadline. They gave you a 30-day deadline from February 19th, so I guess we're looking at March 19th here, or actually, I'm sorry, they're giving you to March 21st 2025. So that has a new deadline to file a BOI. This is if your prior reporting deadline has already passed. Now, the prior reporting deadline. If you had an entity set up before January 1st 2024, you had until December 31st 2024 to file your BOI. Well, that deadline went off the table because of these injunctions that are now all of them removed. There's no more injunctions that you can rely on. You have to file this now. I want to make sure you understand what we're saying here. There's a requirement you have to file. There's no case right now. There's a pending order that says you cannot file this. There's a pending case still in the Supreme Court and they could overturn this later, but they're not giving you a pass on that. So you still got to file. You've got 30 days till March 21st 2025 to file this BOI.

Speaker 3:

Okay, now the penalties are serious. If you don't Could even include jail time, but what's the daily penalty now? It's over 500 bucks a day for failure to file. Yeah, it's brutal, and so let's back up. Maybe we've got your attention. Attention now, I know it's a lot to digest. If you really want that roller coaster ride, you can look at a lot of, especially matt. You've been doing some great videos live on your youtube, um, and you could read article after article.

Speaker 3:

But the bottom line point is, as of today, february 19, 2025, the federal government is requiring every small business owner We'll give you a few exceptions that might apply to you, and I say might very loosely. I feel 99% of small business owners are having to deal with this. You have to file this report. You can do it yourself. You can go to the FinCEN website, fill it out. We'll tell you what generally needs to be on it or we have been providing this service through our law firm or Main Street Business Services.

Speaker 3:

We have two different business entities to help clients set up new entities with a lawyer or just maintain their current entity. You did not have to set up your entity with us in our law firm. But if you have an LLC laying around or a corporation, this is the time to clean it up and either dissolve it or get this filed and get compliant or face these major penalties. So we've got a link down below for Main Street Business Services. You can call on the phone. Boom, we're talking, 200 bucks Plus we're going to help you do your minutes. Make sure you're good with your state anyway, guys, this is a blessing in disguise to get your entity tidied up. So we're there for you with the link there down below. You can call us. Talk to one of our paralegals. They'll be on the phone with you in seconds. Help you get this done. You can go do it yourself. Not terribly expensive, but terrible if you don't.

Speaker 2:

Yeah, and we've done thousands of these for clients. It is not the end of the world. Like Mark said, it's a little bit of an invasion of privacy. But here's what's going to go on this beneficial ownership report, or BOI, you are going to put the name of the business, the tax ID and EIN and then you're going to list two different groups of people that are involved in the business. First group is anyone that owns 25% or more. That person has to be listed on the BOI. The second With their home address. With their home address, now, you don't include their social, but you do have to include their government-issued ID. Passport or a driver's license or state ID needs to be uploaded onto this thing. That's the biggest, probably pain in the butt.

Speaker 3:

Yeah, and think of your grandma that may own an LLC, but you're the manager, grandma you're. And let me repeat, anybody that owns it. Well, my trust owns it. Then, whoever is the beneficial trustee or beneficiary of that trust, if you have a revocable living trust, you have to look through that to the owner of the trust, if you will, as the owner of the LLC. Well, my corporation owns my LLC. Then we got to look at the owner of the corporation to own the LLC.

Speaker 3:

You can't hide behind another entity or behind a trust. The government wants to know who owns us. We'll talk policy and why they're doing this later. So that's the owner, so that's the first group owner, or who the beneficial owner is See that keyword and we're peeling back all the way down until there's a person that owns 25% or more at the end of the day.

Speaker 2:

So it is your local living trust, you and your spouse. That are the beneficiaries of it during your lifetime, which is the most common. You two both own effectively 50%. You two are listed as beneficial owners. Now the second group would be anyone who has substantial control of the business. Now, in your example earlier with grandma's LLC for her rental property, that you're the manager of the LLC. Well, grandma is being listed as the 25% or more beneficial owner. She owns it 100%. You're listed because you have substantial control as the manager of the LLC. So managers of the LLCs or presidents of corporations or officers and companies and corporations, they have substantial control and they need to be listed as well.

Speaker 3:

And that's their home address and their governmental issued ID. So that would be that, quote unquote, maybe invasion of your privacy. Let's digress for one moment too. Can we talk policy? Because some of you are like getting pissed. You're like what the hell, why are we having to do this?

Speaker 3:

The theory was now, this is theory, matt, and I like to debate this. I'm probably a little more optimistic and hopeful that this may help. But basically, the Democrats and the Republicans, in a bipartisan bill about three years ago, said we are sick and tired of money launderers, child traffickers, drug dealers, scam artists hiding behind LLCs that they set up in Florida or Wyoming on a Monday, rip someone off on a Tuesday and then shut down the entity or just disappear on Wednesday. This LLC thing has been abused, the corporation thing's been abused. People are hiding behind it and ripping people off on the web, phone calls, whatever the government's like. This has got to stop.

Speaker 3:

So what they said was if we have everybody that has an entity must register and show who really owns it and who really controls it, we can weed out all the bad actors they hope, and if anybody doesn't report, we have a bigger hammer to hit them over the head with $500 a day. So this is another way of kind of going after, let's say, the Al Capones of the world that were bad guys back in the 20s, killing people or whatever. They went after them for tax evasion. So this is a way for the government to go after bad actors with a oh, you're not going to file your LLC properly, well, we'll put you in jail for that, at least, because that's easier to prove. So they're trying to find another way to go after bad actors.

Speaker 2:

Do you buy into it, Matt? I just think there's a better way to do that than require every freaking small business owner to go in and file this.

Speaker 3:

Okay, Elliot Ness.

Speaker 2:

Yeah, now here. Let me say this on the policy side, because this was a big issue. As we were looking at this and the cases were going back and forth, a lot of people thought I'll just wait until Trump gets in and his treasury department's in. They're not going to enforce this. Well, this is his treasury department. This is their notice, saying we're doing this, guys, and they do think that there's abuse. So if you were betting on not having to do the BOI because you thought Trump was not going to make you do it as a small business owner I hate to say it you're going to have to do it.

Speaker 2:

And now this is this public filing. So let's get back to some policy things, cause I think a lot of people are like this is a privacy issue. I don't want to give all this stuff to the federal government. I set up my entity with the state. I entities are at the state level and I give the state the information. I also got to give it to the federal government. What for?

Speaker 2:

It's not a federal entity, so, but here's where that information is going. It's going to FinCEN and it is not a public searchable database. Okay, no one can go look up your entity on FinCEN to see who owns it. This is a private held private. This is held by the government. They can't even share it with state or other government agencies without a subpoena, so it is not publicly available. You still are providing it to the government, of course, and so that's where this information is going, and then presumably the government is then taking that to make sure they understand who owns what entities and if they're tracking a money laundering case or something like that, they can see who owns it or find the ones that just aren't complying and aren't doing anything and go chase those down because they must be doing something wrong.

Speaker 3:

Yeah, and I would another way of looking at this. As I said at the beginning, this is the brother or sister to the IRS, which it truly is. It's in the same department, if you will, under the treasury. So I would want you to feel like your tax return is private. Your tax return cannot go out on the web unless you're the one that shares it, and this is the same concept. So it's going to be tied up in the treasury department, in a vault, somewhere where they're going to start sorting through the ones that didn't file and say, oh my gosh, this is probably a bad actor, and estimates are now that we have over 40 million LLCs in the country. Now here's some of the exceptions, just quickly If you have more than 25 employees and how much Five million in revenue.

Speaker 3:

Five million in revenue, you don't need to file 25 employees. Five million in gross revenue, you don't need to file. Reason being is they already know who you are. If you've got five million in revenue and 25 employees, they know who you are. If you've got $5 million in revenue and 25 employees, they know who you are.

Speaker 2:

And that assumes you're doing a payroll report on your employees and you're filing a federal tax return, which you would be. So they're like you're on our radar.

Speaker 3:

Now, if you have not had any activity in an entity, you may think you're off the hook. But, matt, I'll ask you to give us the date here. But you may say well, I set up this LLC years ago, or I set it up last year and I'm not even using it. Oh, slow down. This use rule means you haven't had a bank account, you haven't done a transaction, you haven't touched it, you haven't owned property. When we mean use it, it's been in the drawer, truly without even a bank account.

Speaker 2:

Yeah, when's the cutoff date on that? That was before 2021. So if this was an entity you set up in 2019 and you haven't been using it, then you can say, oh, this is the dormant entity, this is the exemption that I can run because I'm not using the entity anymore. But it's like, well, I set it up in 2023, but I'm not using it now.

Speaker 2:

That business didn't go well. Or I set it up in 2023, but I'm not using it now that business didn't go well, or I bought a rental and I sold it. There's nothing going on. You still got to file it.

Speaker 3:

Yep, too late, too bad. Now this is a little recommendation here from two tax lawyers that have done 10,000 consultations, each helping small business owners. If I may I know you may not want to hear it this way the blessing in disguise here is this is a chance to clean house. This is time to empty out the junk drawer. You got this junk drawer full of entities and bank accounts and you're like you know what. I needed to get rid of this entity anyway. Now I need to.

Speaker 3:

If I set it up Since 2021, even if I haven't used it, you need to go dissolve it and file the BOI report. Check that box. You're clean. But it's a chance again to get rid of it. You may have a bank account associated with it. These entities oftentimes have annual renewal fees with the state, so just get rid of it. If you set it up before 2021 and you truly haven't touched it, fine, leave it alone, I guess. But if anything's hanging out there, I'd recommend this is a time to do an accounting. Do an audit of all of the companies you've set up in the last 10 years and just see where they stand. Go to the state website. Do a quick search, you know.

Speaker 2:

Yeah, and I think also for any of you that are just setting up new entities now or maybe even this year. I mean used to be you had 90 days to file this. Well, now you got 30, actually the new deadline for 2025. Just so you know, if you're just setting up entities now is you had a 30 day 30 day deadline after formation to get your BOI filed, and so this is a new thing we've already been doing in our law firm for our new clients. We're setting up entities for across the country. We're doing 500 entities a month, you know, and, as Mark said, also at Main Street Business Services, where we do compliance for clients, we've already filed thousands of these.

Speaker 2:

I've done over a dozen on my own entities of POIs. So don't be scared of it. I know a lot of people are like probably thinking I'm just going to wait till that Supreme Court case and see if it gets overturned. You're going to have penalties. I mean you're rolling the dice. I can't tell you as a lawyer that you can rely on that. Yet we had this injunction in the Smith case last week, last month, that we're saying there's a legal requirement, you don't have to file it. There's an injunction against FinCEN to enforce it. That is gone now.

Speaker 3:

Now here's another recommendation. I'm a glass half full kind of guy. You can tell Matt's glass half empty, but a glass half full. I'm a little thirsty, yeah, yeah, okay, drink your water over there, okay. Now here's another idea that may resonate and help you through this process.

Speaker 3:

At our law firm, as Matt mentioned, we love to do what we call a comprehensive consultation. We build what's called a trifecta. We know that clients that are organized make more money. Clients that are organized are happier. They are more successful. They save money Deep down. You know this. So if BY and the FinCEN is asking you to get your crap together, you know what Bitch and moan. But at the same token, take it as a reminder that you will be more successful by dealing with this. So if you need which we love call the law firm and say, hey, let's do an organizational. Look, look at my last year's tax return, look at the entities I have. I'd love a trifecta with a plan. By the way, you probably need to get your estate plan done. You don't even have a will. Let's get organized. When you're organized, you're going to live that American dream more successfully. So take this as an opportunity to kick yourself in the butt and get this stuff done.

Speaker 2:

I love that. That glass was helpful, and let's just end it there. Okay, let's just end it there. We want to give you the update. Make sure you knew what was required. This is breaking news coming out of the FinCEN and the courts and we want to make sure, as your source for tax and legal knowledge as we delivered it to you guys as quickly as possible and for anybody listening you got to subscribe to the podcast. You got to subscribe to our YouTube channels. Make sure you're following this stuff and staying up to date, because we're giving you all the strategies on save taxes, protect your assets.

Speaker 3:

We are your advocate for success in Main Street America. The podcast Main Street Business Podcast. Our company, main Street Business Services. We truly are here for you. We both own real estate in Main Street America. We have our small little firm with great paralegals and accountants and lawyers. We're not going anywhere. We really want to see you succeed and charge affordable prices to help you get there. So we hope this has been helpful. We've got lots of updates, man. We've got the IRS getting audited by Doge right now. We've got a tax legislation in the joint committee with the House and the Senate right now, with promising a 3.5 trillion tax break. We will keep you posted on any developments at the IRS building and with this legislation. It's going to be a busy year and a busy year to be successful. So see you on the backside.

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