Profitable Painter Podcast
Profitable Painter Podcast is a rich resource for anyone interested in starting, running, and scaling a professional painting business, offering valuable insights, strategies, and interviews with industry leaders. Through case studies and in-depth discussions, we deliver a vivid picture of the painting industry, with a disclaimer that any financial or tax information is general and not a substitute for professional advice.
Profitable Painter Podcast
Avoid Hefty Fines: Essential Guide to FinCEN BOI Report Compliance for Your Business
What if non-compliance could cost your business more than just money? Daniel, founder of Bookkeeping for Painters, and Richard, the advising director, tackle the critical necessity of filing your FinCEN Beneficial Ownership Information (BOI) Reports before the looming deadline of December 31st, 2024. With the specter of $591 daily penalties and even potential jail time, this episode isn't just a casual chat—it's a vital public service announcement for all LLCs and corporations. Learn how to sidestep these pitfalls with practical guidance on the straightforward filing process, easily accessible on the FinCEN website. We shed light on the 80% of businesses yet to file, emphasizing the need for urgent action to protect your business.
Get ready to navigate the complexities of BOI filing with our comprehensive breakdown and expert insights. Whether you choose to handle it independently or seek help from a lawyer or the supportive community in our Facebook group, "Grow your Painting Business," we’ve got you covered. As the holidays approach, don't let the dread of looming deadlines overshadow your festivities. Tune in to ensure your company remains compliant, and brace yourself for forthcoming episodes featuring more uplifting content. Join us in making compliance a breeze, so you can enjoy peace of mind and a penalty-free future.
This is Daniel, the founder of Bookkeeping for Painters.
Speaker 2:And this is Richard, the advising director at Bookkeeping for Painters. And I tell you, daniel, I can tell that we are definitely getting into winter. The weather has turned here. We had our first snowfall of the season just a couple days ago and when this time of year comes around, we think of like the holidays, and we also think of December 31st being a filing deadline for some of our compliance items. And I would much rather talk about the holidays or the snow, but I think today we're going to talk about FinCEN and Beneficial Ownership Information Reports, because those are coming up on December 31st 2024, about five weeks from the recording of this podcast.
Speaker 1:Yeah, we did a podcast on this at least one prior like several months ago, at least one prior like several months ago and it's kind of been in the ether about this upcoming deadline that FinCEN is requiring. It impacts pretty much all of our clients with the exception of a few, but it probably impacts you if you're listening, and I know you were mentioning you've done a lot of consoles recently kind of bringing this up and a lot of folks are not tracking that. This is a thing that they got to take action on and they only have a few weeks left.
Speaker 2:Yeah, yeah, for sure. I think you had an interesting statistic from Forbes about how many companies have actually filed their BOI reports with FinCEN, and it's not as many as we'd like to see, yeah, 20% of businesses that need to file with FinCEN have not filed yet.
Speaker 1:I'm sorry, 20% have filed that need to file, so that leaves the whole other 80% have not filed yet. So not a good. I guess it fits into Pareto's law there, but it does not look good for the 80% of folks who haven't taken action on this yet, considering that there's some hefty fines for not doing this come January.
Speaker 2:Yeah, yeah. So if you're in that 80%, you are in good company. But this, this podcast, is kind of kind of be your, your call to action. Right, we've, we really have to act on this, because if we fail to file our reports by December 31st, the penalty for failing to file is $591 per day, and they could even include jail time in the event of, like, a willful failure to file. Now I would like to think that the Department of the Treasury would be a little bit lenient, especially being, you know, the first year that this is required. But those penalties are codified into law. So it is there and you know I would not want to be putting myself at risk for, you know, almost a $600 a day late filing charge late filing charge.
Speaker 1:Yep, yeah, well, and the good news is you just you do have time and it is relatively straightforward go to the finn center website and plug in your business information and your your personal information. Um, and probably takes I think it took me like 15 minutes or so to do it, it wasn't. It's not. It's annoying that we have to do it to begin with for sure, but you know, it's a well, it's a good investment of your time to avoid the $600 a day.
Speaker 2:So yes, for sure. And if you're wondering, you know what. What is this FinCEN? What is this website? So FinCEN is kind of an acronym. It stands for the Financial Crimes Enforcement Network. It is spelled F-I-N-C-E-N and the website is going to be wwwfincengov forward slash BOI and, like Daniel was mentioning, you can do your entire report for free by yourself. You don't need to get a professional involved to help you with it, unless you want to. At that website and for most businesses it probably take about 15 to 20 minutes. Businesses, it'd probably take about 15 to 20 minutes.
Speaker 2:If you're wondering, you know, does this actually apply to me? The answer is probably yes, it's going to be, you know, applicable to anyone who has an LLC or a corporation or an LLC taxed as a corporation. The only time it would not apply to you is if you have no business entity. So in other words, it's just you, your social security number. You are a sole proprietorship in the most basic sense of the term. But if you formed your business by filing a piece of paper with your state government, then you probably need to file a beneficial ownership information report. All right, so once you determine that you are a reporting company and that you do have this obligation. What kind of information do you need to bring with you to the website? Well, you're going to need information about your business. So name, address, federal EIN number is going to be very important. Federal EIN number is going to be very important. You're also going to need information about the owners of that business. Now, owner is kind of a loose term, so we're talking about members, partners, shareholders, beneficiaries Anybody who has a benefit from this business is considered an owner, and if they have 25% or more of an ownership share, then they are required to be reported or mentioned in this report. Additionally, people who have less than 25% share but who exercise substantial control so your managers, your officers, that sort of thing they are also required to be on your BOI report. Now, for each one of these owners or substantial control persons, you're going to need to have name, address and also some kind of legal identification document. So these are going to be government-issued documents that have a number on them, something that can be tracked. So think passports, driver's license, state-issued ID cards, that sort of thing the government wants to be able to trace back. You know who is receiving benefit from these companies, who is kind of at the bottom of the food chain there where the money from the company is eventually funneling down to the money from the company is eventually funneling down too. And again, the deadline on that is going to be December 31st 2024, for businesses that are in existence already. If you are forming a new entity, then your deadline is 90 days from the time that that entity was formed. So any new LLCs you might establish or corporations you might create, make sure you get that report filed no later than 90 days of that company being established.
Speaker 2:Uh, one question that has come up and this probably isn't going to apply to most people, but but maybe some of you is uh, what if I have a LLC that is owned by my IRA? So it's, it's not in my name directly, but it belongs to my, my retirement account. Well, who is going to be the beneficial owner of that IRA? That's going to be the person who needs to be reported. So, yes, those LLCs do need to file a report and it needs to point back to the beneficiary of that IRA. Same thing with any LLCs that might be in a revocable living trust or a grantor trust. If this is a trust that does not have its own EIN, the trust itself does not have to file a report, but any LLCs owned by that trust would need to file, just as if they weren't owned by a trust, and the beneficial owner would be the beneficiary of that trust. So it's going to go all the way down through the trust to the bottom there, all right. So this has been a lot of coal in your stocking for this time of year, maybe we talk about. You know, is this going to cost you money? Well, it doesn't have to. It is free to register on FinCEN's website.
Speaker 2:If you feel that you could use some professional help, you know you can certainly hire a lawyer to help you with this. This is, you know, considered typically to be legal work, so it's not something that you know we at Bookkeeping for Painters are able to directly assist you in, but we can certainly point you in the right directions and make recommendations for folks who can help you. You do not have to file this report every year. You only have to file a new report if things change. A new report if things change. So if your company moves or one of your owners move or you add a partner, you would need to then update your report, but if nothing's changed, then there's no need to file every year, like you might have to do with some of your state filings.
Speaker 2:Another question we've gotten is well, you know there's a lot of personal information going into this. Is my information going to be kept private? And the answer is yes, is not going to be making these reports public. There's not going to be a website where folks can look up your business and your name and your personal address. All of this will be considered confidential and they have said that they will not release this information other than a court ordered subpoena. So to the extent that you trust the government, your information should be fairly private. So we don't need to worry too much about you know people looking up our personal information.
Speaker 1:And one of the things that I think folks might get, might miss is maybe you started an LLC for a particular business and maybe it didn't work out or you just kind of forgot about it. I know that I've done this. You know where I have a couple LLCs that are actively used. Probably you should go ahead and close those if you're not using them, because that will apply to them as well, unless you want to do a bunch of other BOI reporting to FinCEN. Don't forget about those LLCs that you might have opened in the past but haven't closed yet.
Speaker 2:Yeah, that is a great, great point, daniel, because what's going to happen is eventually, sometime in 2025 probably, fincen is going to contact the Secretary of State of each of the 50 states and ask for a listing of all the LLCs and corporations formed in that state and they are going to cross-reference that with their BOI reports and if they do not have a report for an LLC, they're going to be sending out nasty letters. So if you've got an old business that you haven't used it's just kind of collecting dust best thing to do is go ahead and put it out of its misery, dissolve that with the state, formally, formally dissolve it with the state, and you'd probably want to just let the IRS know that you're dissolving it as well, because the last thing you want to do is get penalties for failing to file a report on a business that you don't even remember exists. You know, some folks have said like, well, you know, didn't? Didn't this get ruled as unconstitutional? Weren't there some lawsuits out there? Do we really have to worry about this? And this is kind of a two-part answer. Yeah, there have been lawsuits about this. People have sued the government saying that requiring people to report this information is unconstitutional and a federal district court in Alabama last spring did find that certain parts of this were unconstitutional. Problem is is that that ruling only applied to the plaintiffs in that particular case. So unless you were one of the people who brought that lawsuit to the federal court, you still have to file. Whether it's constitutional or not, that can be argued by the lawyers, who may have differing opinions on that, but as of now, it is still the law.
Speaker 2:So don't be late on that. Go ahead and get that report in before the end of the year. All right? Well, if you need more information about this, I highly recommend FinCEN's website. They've got some great questions and answers, pages and pages. It'll put you to sleep if you can't fall asleep, but the main takeaway is December 31st is the deadline. I would say.
Speaker 2:If you are on the fence about whether you have to file or not, go ahead and file. Or, on the side of caution, about 15 to 20 minutes, you can do it yourself. If you do need help with it, or you just don't want to mess with it, you can certainly reach out to your lawyer or, if you want to drop us a line in our Facebook group Grow your Painting Business, we can offer you some resources that are reasonably priced, and there are firms that are owned by lawyers who can help you take care of this reporting, but you don't have to pay someone. You can certainly do it yourself, and if you have questions about any of this, feel free to drop those in the Facebook group as well. So get this knocked out so that we can enjoy our winter and our holidays and we can cruise on into 2025 without having to worry about any silly penalties for failing to file a report.
Speaker 2:So, on that great note, I appreciate everybody listening. Future episodes will probably be a little bit more positive of a note, but we just we looked at this as kind of like a public service announcement. You know we don't want anyone to get caught by this, so we appreciate you taking this seriously and we will see you on the next episode.
