Business Owners: An Important Filing Requires Your Attention in 2025

Q:

I’m getting ready to start a small business this year. I’m excited for what’s ahead but even though I have partners, it feels like there are a million things to do.  On top of it all, I’ve been told that the government now requires that small businesses file a form about its owners or else face a penalty. What’s this filing and what are the deadlines?

A:

Running a small business can be one of the most rewarding endeavors, but it will test you. New regulations and filings don’t help, but here we are.

And you’re right. Since Jan. 1, 2024, the Beneficial Ownership Information (BOI) Reporting Rule and Beneficial Ownership Information Access and Safeguards Rule have required that different kinds of U.S. companies, like S-corps and LLCs, disclose personal information to the federal government about the companies’ beneficial owners, senior officers, and anyone with a controlling interest.

Why Is This Reporting Required?

The U.S. aims to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures. That’s why the filing is with the Treasury’s Financial Crimes Enforcement Network (FinCEN).

What Is a Beneficial Owner?

A beneficial owner is an individual who either directly or indirectly has substantial control over the company or owns at least 25% of the company.

Who Needs to File?

In general, a company that may need to file is registered with a secretary of state as a corporation, LLC, or some other entity. Additionally, a trust that owns one of these entities may also have a reporting obligation under this new act. There are 23 business categories that are exempt. Work with your tax attorney to help navigate this filing’s complexities, which include determining whether your company is exempt or not.

Examples of Reporting and Non-Reporting Entities

• Reporting: A single-member LLC taxed as a sole proprietorship will be subject to this rule, assuming the entity has its own EIN and filed registration documentation with a secretary of state.
• Non-Reporting: A sole proprietorship is not considered a reporting company (since it’s not registered to do business) and doesn’t need to file a BOI report.

Why It’s Important to File

Acting promptly (including consulting with your tax professional) is essential because there may be civil and criminal penalties imposed for not filing, including accountability for senior officers.

Key Deadlines for Business Taxes in 2025

Ensure your filings are on time to avoid penalties. The deadline schedule for 2025 is as follows:

• Businesses formed in 2024: Have 90 days from the date of formation to file.
• Businesses formed on or after Jan. 1, 2025: Have 30 days from the date of formation to file.

Penalties for Non-Compliance

Failing to file can result in serious consequences, including:

• Civil penalties up to $591 per day of non-compliance.
• Criminal penalties such as fines up to $10,000 and imprisonment for up to two years.

How to Prepare for Business Tax Filings in 2025

1. Consult your tax professional: Understand your specific obligations under the BOI Reporting Rule.
2. Gather necessary information: Ensure you have the required personal information of beneficial owners, senior officers, and controlling parties.
3. Verify exemptions: Confirm if your business falls under one of the 23 exempt categories.
4. File early: Don’t wait until the last minute – early filing reduces the risk of errors and penalties.

Keep aware and stay compliant

Navigating new business tax requirements can feel overwhelming but staying informed and proactive is key. By understanding the Beneficial Ownership Information Reporting Rule and meeting your deadlines, you can ensure compliance and focus on what you do best: running your business.

For personalized advice, always consult with your tax attorney to stay ahead of the curve in 2025.