There's been a lot of buzz about the new Beneficial Ownership Information reporting requirement, but have you filed yours yet? Are you still trying to figure out what it even is?

In this episode, Ash and Lynne discuss a crucial topic that has been making waves in the business world throughout the United States. They discuss FinCEN's new reporting requirement and shed light on who needs to comply, the potential penalties for noncompliance, and the complexities of reporting for different entities.

They also talk about the risks associated with entrusting sensitive information to third-party companies and provide insights for business owners and professionals handling multiple entities. This is definitely something that, as a business owner, you don't want to sleep on, and make sure you take care of as soon as possible.

If you have specific questions about any of these topics for your practice, or if you'd like to have another question answered on a future podcast, please reach out to the Edwards & Associates team. Please also contact us to find out more about Ash's financial course.

Visit us at: https://EandAssociates.com

Key Topics:

• Introduction to BOI
• Categories of Entities Subject to BOI
• Penalties and Filing Deadlines
• Responsibility for Compliance and Potential Risks
• Additional Considerations for Complex Business Structures
• Forms and Filing Process

Welcome to Beyond by Wings, the business side of dentistry, brought to you by Edwards and Associates, PC. Join us as we discuss how to build your dental practice, optimize your income, and plan for your future. This podcast is distributed with the understanding that Edwards and Associates PC is not rendering legal, accounting, or professional advice. Listeners should consult with their business advisors before acting on any of the information that is shared. At Edwards and Associates, PC, our business is the business of dentistry. For help or more information, visit our website at enassociates.com. Hello and welcome to another episode of Beyond Bitewings. In today's episode, we will be talking about a buzzword that's been flying around a little bit and it's called BOI or BOI.

It's this new reporting requirement by FinCEN, which is the Financial Crime Enforcement Network. So BOI, which stands for beneficial ownership information, it's just a reporting requirement, not a hard thing to do, but there are certain attributes to this reporting requirement that we felt necessary to let our audience know, through our podcasting platform. And to talk more about the subject matter, we have our returning guest and an ex host of Beyond Bitewings, Lynn Ledbetter.

Hey. How are you?

Good. How are you?

I'm good. I'm glad to be back.

I know. It's always a pleasure to have you back.

I love doing these, but I will say it is 3:30, and there was no coffee downstairs, Ash. So Oh, no. I'm not happy.

Oh, I'm sorry to hear that.

You know how I like my 3 o'clock coffee.

Yeah. You do. Yeah. That's true. That's true.

That's okay. I'm gonna power through.

Okay. Alright. I know you can.

I can. Yeah. But I do love to educate. Podcast.

Yeah. Yeah. I know. I can tell.

Yeah. So you wanna talk about BOI?

Yes.

Because it's, like, so exciting.

Tell me about it.

Right? It's so exciting. Yeah. As you said, it is BOI stands for beneficial ownership information, and I guess the accounting industry in general just loves their acronyms. So BOI for short. And it's a requirement of FinCEN, the Financial Crimes Enforcement Network. Again, another acronym, FinCEN.

Mhmm.

And so this was, effective as a part of the Transparency Act, which is basically designed to monitor for illicit money that might be going or coming to and from terrorists.

Mhmm.

So that's the goal. But because they put this in place, we have a lot more reporting requirements put on us, and so we're we're gonna suffer the consequences because of of this. So that's okay. It's not too

bad. Yeah.

So it went into effect on January 1st 24. Mhmm. And it applies to kind of 2 separate categories of entities, those that have been set up prior to 1 124

Mhmm.

And those that are set up after 1 124. So they have a little bit different reporting requirement. And so we're gonna talk about both as we go through, but I would treat them very differently. And so we'll talk about why and and what we should do and that sort of thing. And so, basically, if you have an entity that is a legal entity that was set up with a secretary of state of some state and, typically, those are LLCs, PCs, PAs, that type type of thing. But anything that is legally set up with the state, then you are subject to this BOI filing. Now there are some exceptions, and everybody's gonna be looking for the exception so they can get out of it. But I will tell you that certainly most of our clients, almost all of our clients, almost all privately owned, small, wholly owned businesses are not going to meet any of the exceptions, because they are for large publicly owned, governmental type a like by the SEC or or things like that.

And so that's why they're, quote, exempt. But still, I know people are gonna try to get out of it, so I'll tell you a few of the ones that are gonna be probably keyed in on. And, oh, no. I'm that, and I'm exempt, and I'll tell you why you're probably not, so unfortunately. So those are investment company or investment advisors. So if you set up, say, an investment That would be some kind of publicly owned. They have to be a registered investment adviser, that kind of thing, a registered investment company. So that would not apply.

Accounting firms were one of the ones that are, quote, exempt, but those are the big, big accounting firms that are regulated by the big agencies. So even we are not exempt. Tax exempt entities are exempt, so you might have a few there that are actually exempt. And then the only other one that, really, as you look through the list that people might go, oh, that that might apply to me, is the inactive entity. And so that might apply to a a few entities. Like, some people set them up, and they don't need them for a while, or they used to use them. They don't need them anymore, but they're still active. Mhmm.

And

so if you have an an entity that meets all of these criteria, then you are exempt for that entity. That is it was had to be set up before January of 2020, so it had to be established in 2019 or prior. It doesn't engage currently in any activity. It's not owned by a foreign person. It hasn't changed ownership in the past year. It hasn't transacted any financial business exceeding $1,000, and it doesn't own any assets, either domestically or internationally. So if if it truly is just an entity that doesn't have any holdings, doesn't have any activity, and that's older than 2020, it is exempt and it is considered inactive and therefore exempt. But anybody else that owns a dental business that is an a legal entity, not operating as a sole proprietorship or a real estate entity or, a medical entity, anything that generally is our clientele are gonna have to comply with the requirements.

And the fees are fine because the next thing that comes up is, well, do I really have to? And what's the repercussions if I don't? The penalties are high. They're really looking to enforce this thing for whatever reason. They're honed in on it. Mhmm. And it had been postponed for a couple of years, and a lot people thought it would be enacted, you know, not act enacted, the opposite of enacted, that it would be canceled before it started. But that doesn't seem to be the case. They really are going full force with it. Mhmm.

And so, originally, the fines were set to be if you were found to be intentionally noncompliant, like you're just refusing to file up to $500 a day in fines A day. A day in fines, up to $10,000 or 2 years in prison. And this is a prisonable offense. But then, remember, this was just enacted on January 1st 24,

and

the fines were supposed to be $500 a day. But before the end of January, they increased the penalties to $591 a day. So they're not getting more lenient. They're getting more stringent. So really, you've gotta really be on this. And my concern is, like, we're educating our clients, our small businesses, so that they are aware of this because we don't always know in time that they set up a new entity for them to be compliant. Because you only have, in in 2024, you have 90 days to register a newly formed entity. So if you set as as a client of ours, as a small business owner, if you set something up today in 24 and don't tell me about it until 25 when I go to do your taxes, then you are late in your registration.

So you have to know about it because we can't catch all these in time to make sure that that everybody's compliant. So you just have to know this rule. So there's gonna be ongoing reminders from us. Hey. Just to set up a new entity, don't forget you have to do this because it's gonna be very easy to forget. It's just, you know, one more thing in our very busy lives that has to be done. So yeah. So if you set up a new entity in 24, you have 90 days to register that new entity, and we'll talk about what all you need for that.

But so that requirement drops to 30 days after 2024. It was supposed to be 30 days, and people were like, we don't know how. We can't get the message out. Nobody knows how to do this. Like like, you we can't meet this deadline. And so they extended it to 90 days, but it drops back to 30 days, starting next year. So if you set up a new entity next year, within 30 days, you have to remember to go register that entity. So that's how it differs from for entities that were previously set up versus new entities.

So anything that was already set up by before 1 124 is under a little bit different rule versus the ones that are set up in 24. So anything new from this from one one forward forever until this is, you know, revoked Right. Has to be reported within 90 days this year, 30 days next year and going forward. But those that were already set up, do not have to report or start reporting until the end of 24. So you have this whole year. And, normally, I'm like, just get it over with. Go report it. Be done with it.

In this case, we're saying, no. You should

That's interesting.

Yeah. Yeah. And here's why, because there's no repercussions for not filing. If I file today versus if I file on December 31st, I mean, the only problem would be is if for some reason the Internet went down on December 31st. Right? Maybe don't wait that long.

We're in 2024 and not 1999 about to enter 2000.

That's right. So we should be okay. But, you know, maybe December change reporting kicks in. So if there's a change in any kind of status, if there's a change in owner, if there's a change in address, if there's a change in the expiration of your driver's license or your passport. So the minutest things might constitute a change, and those have to be reported within 90 days this year, 30 days going forward. So you've just then subjected yourself to having to maintain this registration current for all eternity. So there's no

you fill out the initial BOI Mhmm. During some time during the year Right. And let's say for whatever reason your driver's license expires. Right. Or you change your address, you move to a different house. Right. You got a new driver's license, that needs to be updated with your BOI. And if you don't do that, you could technically be subjugated to that 5.91 a day Right.

Penalty.

Right. I mean, now, would they consider that to be a willful, you know, noncompliance? Well, I don't know because this is all very new. So I wouldn't want to say no. That's they're gonna blow that off. Right. I would say we need to keep this updated because

Oh, that's insane.

Yeah. Yeah. So who's going

to be responsible for this? Is it going to be, you know, the person, the business owner? Their accountant? Their the attorney that sets up the entity?

Right. Ultimately, it's going to be the owner or owners. Mhmm. Because

of the updates.

That's right. So they're they're the ones that would be subject to the penalties and fines. Now if you have some sort of agreement with your accounting firm or your attorney, then Mhmm. Then maybe you can pass that responsibility onto them and make them be subject to the penalty. But FinCEN is gonna say that the owner is the one who was noncompliant. It it's all on them. And there's a lot of confusion and even controversy state to state about whether accountants can even file this for clients

Interesting.

If this is the practice of law. If if this turns if a state deems that this is the practice of law, updating these entity informations, then, CPAs are not allowed to do that. No no one can

Mhmm.

Practice law without a a license that's Mhmm. The accounting firm could lose their license or be subject to lots of really bad things, so you can't practice law without a license. The state of Texas, for instance, where we're located, has not determined yet whether it is the practice of law or not, so we don't really know if we're allowed to file for the clients or not. Right.

We're still too early.

It's still too early. We're taking a risk if we do. We've asked the accounting board. The accounting board has said that we don't make that determination. The law board has to make that determination. Actually, they've kicked it up to the Supreme Court is going to set up a committee to evaluate whether it's allowed or not. So we're all and all the states are doing it differently. There's nothing consistent.

So it's, kind of a free fall for all at the moment. Wow. Yeah.

Wow. So if you've basically been active before 11/24, essentially, just wait till the end of the year.

Yes. Absolutely. That is my best recommendation.

All the more reason.

Yeah. And, you know, the filing if you're a single owner Mhmm. 100% owner, the filing is not complicated. Say you're a single owner

Mhmm.

And you have one entity. Right. Then, yes, you've got this one more requirement. It's not a huge deal. Let's see what you're going to have to report because it's it's not

Yeah. Yeah.

It's not difficult, but it can get difficult, and it can get complicated. So we'll go into why it's such a pain in just a minute. But if you're a single owner, one entity, what you're gonna have to report is basically your entity name, your EIN, and then who are the, quote, beneficial owners. We we didn't really even talk about beneficial owners.

That's right.

So why are we doing this? So let's let's back up

for

a moment. Okay. Because if you think about people that try to hide money, launder money, that kind of thing, You've heard of shell companies and

Right.

Holding companies and all these sort of things.

Right.

That's what they're trying to unravel those to get to the ultimate owner. So if you've got company a that's owned by company b that's owned by company c that's owned by 2 different LLCs that are company x and y, and then they're trying to find out who who is the real owner then of beneficial owner has to be a person. So you're looking for a person. So you're you're dissecting down to the basically that that root. But so if you are a single owner and you don't own it through an entity, you are the beneficial owner.

Mhmm.

And so what you're reporting is your information, your name, your social, your, you know, address, and then you have to provide a piece of identification to prove you are who you are. Because I don't know if you know this, but thieves and terrorists lie about yeah. No. It's true. It's true, Ash.

Oh my goodness.

So you have to prove you have to prove that you are who you say you are, and that's where you have to then upload a driver's license or a passport or some kind of government, ID or something like that. But that's what you have to report. So you're reporting your entity information, so that EIN and its name and address, and then the beneficial owner, which is, in your case, just you, the owner. Mhmm. You're the beneficial owner. Now when it becomes more complicated is and not even complicated, just annoying Mhmm. Is say I own 10 practices, and I have them each in a separate entity

Mhmm.

Plus I have a real estate entity, and I have a couple of different own a couple of different buildings, so I have 2 real estate entities. And so I've gone in, and I've reported everything. That's fine. I mean, it took me 12 times to to file all that. It was a pain, and it was some time out of that I didn't have. But no big deal. I did it all. Right? And then my driver's license expires, and I get a new driver's license, and that driver's license expiration date changes.

That's considered a change that has to be reported. Now I have to go in and report that for 12 entities, so I have to do it all over again. And so it can be very time consuming when you or if I move, like you said, anything like that. So there's a way around that, and that's by getting, what they call a VINSON identifier. So you can get an identifier Uh-huh. Where and remember, this is all very new. So what we believe this is going to mean is you can go in and basically report yourself to Fence Inn. You go to Fence Inn.

You give your name, social, and your driver's license there to Finsend directly, and you get this number back. You know, similar to you have your Social Security number or your EIN number, you would then have a Finsend Finsen number.

Right.

And then that Finsen number, you would use to report on those 12 entities that I set up. So then if I move and my address changes, I could go to my fence end, update it there in that one location, and I you're good across those 12 entities, saving yourself a little bit of time. So there could be some value in that.

Especially for multiple business owners.

Exactly. Yeah. Yeah. And so the other reason we are kinda recommending that route, again, it's not a proven thing yet.

Of course, it's still new.

It's still new. So we need to we need to find some guinea pigs to help us out. So say you instead of a single owner, you are a partnership, and you're a big partnership, and you have, say let's say there's only 5 owners, but you're not buddy buddy with all 5 of these owners. You know, you don't know them well.

Right.

You just work with them. A couple of them you know well. A couple of them is purely a business Where? Maybe you don't want them to have your Social Security number, because one of those partners is gonna have to report those owners of that entity.

Oh, so the beneficial ownership information reporting also will require your Social Security

number. Yes. Yes. And your address, and your driver's license. So now that whoever is reporting that has everything they need to steal my identity. Right? Because, say, you've got your managing partner. He is going to file the report

Right.

For those 5 owners. And so he's got the name, address, and driver's license number for all of his partners. Not sure that the Social Security number is actually a part of that, but he's probably got it from A

lot of sensitive information.

Ones. Yeah. Very sensitive information. So, yeah, he would have everything he needed to steal or sell your identity, whatever.

You know? After you if you've angered them.

Yes. Exactly. You know,

that would be more scary.

So that's another reason to just get a Finsen number

Right.

Because then all you have to do is give him your Finsen identification number.

That's right.

And along that line of identity theft kinda situation

Uh-huh.

I I can already tell you that there are going to be companies pop up just like the ERC mills. Yeah. They're gonna pop up as BOI mills, and they're gonna offer to do these things for you. And I would highly recommend that you get a referral before you start using anyone. Make make sure they are reputable. Make sure they're not just just a company that's just opened Mhmm. That's then gonna have all of your information, or make sure you get a Finsen number so that you're not giving that company, that unproven company, all of your confidential information.

That's right.

So I would be a little wary, especially in the beginning, of these companies that are gonna say, hey. We can do this for you. I think they're a good idea because I think they can largely do it cheaper than your, say, your accounting firm can, but they also aren't gonna be as careful. Right. And they're gonna have a lot of your information, and you can at least trust your accountant.

Because they already have it.

Exactly. They they already have it. But for the most part, I think most business owners are gonna be able to file this themselves.

Yeah. I was gonna ask, like, you've seen this form. It's not. Right?

It's not.

Especially if if you don't have a complicated business setup. Mhmm. You know, as you said, if it's just a single owner, a 100% owner of a business, it should be fairly self explanatory. Yeah.

It is. It's self explanatory. It doesn't require a lot of expertise. Like, I could go through it and explain it, and you would say I can read the form. I mean, literally, it's just a matter of reading the instructions and enter your name here, enter your EIN here. You you can understand that. People are gonna be able to understand that. And, again, you have

to upload your identifying documents.

So if you have to upload your identifying documents. So if you have to upload your driver's license or upload your passport, well, then you're gonna have to upload that to either your accounting firm or to a third party company to prepare that. That's risky, and and it's more complicated. If you gotta upload it to me, you might as well upload it directly to them, like, have you really saved yourself any time and effort by by sending it to me to file it on your behalf. I I don't think so. Now when you're a complex structure, yes, I think there is some benefit to at least getting advice before you go in there and start thinking it's real easy because you may have a beneficial owner that you're not aware of, and we'll talk about some of those. But, otherwise, you can handle it yourself.

Okay.

Just just get in there and do it, but don't do it before December. Right. Unless you're new, and then don't forget. So yeah.

90 days.

All these caveats. Yeah.

Right. Okay. So the main takeaway would be if you set up a business in 2024, within 90 days to your reporting, assuming you don't fall into that exemption category. If you've been in business before 1 1 of 20 24, you have till the end of the year. If your business setup isn't too complex, log in and see if you can do it. It's an online form.

It is. Yeah. You can just, literally, I don't have the website. I would just Google

No.

B o I Vinson

Right.

And it will probably take you to the login portal. You don't need any codes or information. You just you set it up. You register yourself as

Oh, so you need to create an account? Yep. Okay. Okay. And do that. Actually, you know what? On that note, so let's say if a client logs in, creates the account Mhmm. Later realizes, no, I want my account or someone else to do it. Right. Can this third party create an account for them?

Yes.

Even though there's already an existing

Oh, if there's already an existing one, no. One account per entity.

I see.

Yeah. Okay. There can't be you can't set up, like, secondary users or things like that. Every entity gets one account, period.

Okay. So that might be also something to mention to our listeners Mhmm. Is that, if you already have a complicated set up, before you create an account, talk to a professional Mhmm. Maybe an attorney or your CPA, and then move forward with whether you should create the account or have them create the account.

Right. Yeah. Because the other thing I would just quickly touch on about beneficial owners, it it you actually don't have to be an owner to require being reported. So the owners, that's the obvious part. So it's beneficial owners. And if you own 25% or more, of that company and if you own a bunch, it get that gets to be a complicated calculation. Right. But if you own 25% or more of an entity, you have to be reported as a beneficial owner.

So, technically, if you had a 20% partner, they might not have to be reported. However, if you if they play a significant role in the financial or managerial aspect of the company, say, an executive position, the managing partner, that's gonna be an owner anyway, but the president of the company, things like that, if they don't happen to be an owner for some reason, like maybe you're in a DSO structure or something like that, they still could be a beneficial owner. So you would wanna check into those those rules as well. So if you've got someone in a high level financial position, even if they're not an owner, they might be, quote, beneficial owner and might have to be reported.

Okay. That's a great point. See, I wouldn't have thought of that. I would have been like, okay.

Well, because it's called beneficial owner, so why would they be included in this? But they are under the rules. Okay.

Okay. So it can technically have some special caveats that may need to be overseen by a professional.

Yeah. So if you've got any anything that you think is weird or uncertain about, yeah, reach out for advice. But actually filing it, you can probably file it file it by yourself. But if you're very complex, I would definitely seek seek some professional help. But if you're just a single owner, a couple of people, that's not gonna be difficult. But if you have any kind of multiple partners, sub sub companies, owning sub companies, like, who is my beneficial owner, you may need help digging down to that

ultimate person

that needs to report, yeah.

Okay. Well, great information there, Lynn. I'm sure our listeners would love and get all excited after hearing all of this about I'm sure. POI about this new thing that's out there trending. Uh-huh. What was it? PPP? Oh. Idol?

Don't even. PPP started.

So this is the new thing, people.

New thing. It's not as bad as those, but, yes. Yeah. At it's not quite as stressful as those.

Yeah. But,

yeah, there's always one more thing that I got to learn and pass on.

Yeah. Well, that's good. At least, you know, that gives us the option to have you on the show.

I guess so.

Yes. Alright. So thank

you. Yeah. It's

been fun. Yeah. Same here. Well, till next time.

Take care. Thanks.

Thanks for listening today. Be sure to subscribe to Beyond by Wings on your favorite podcast platform. For more information, you can follow us on Facebook, Twitter, and LinkedIn, or reach out to us on our website. Site. You can also shoot us an email at info at eandassociates.com.