Adapting to Change: Preparing Your Small Business for Beneficial Ownership Reporting

ARTICLE | March 05, 2025

In the wake of recent changes to Beneficial Ownership Information (BOI) filing requirements under the Corporate Transparency Act (CTA), small businesses find themselves navigating a shifting regulatory landscape. While federal authorities and courts continue to debate the law’s scope, most small corporations and limited liability companies (LLCs) are now expected to disclose details about who really owns and controls them. By boosting transparency, the CTA aims to curb money-laundering and financial crimes; however, it also introduces new obligations that can be confusing and time-consuming. This article will walk you through the key aspects of the CTA, discuss its updated deadlines, and explore the steps you can take to adapt your business practices and stay compliant.

Understanding the Corporate Transparency Act (CTA)

Purpose of the CTA

The Corporate Transparency Act is designed to unmask the true individuals behind certain business entities. Historically, criminal enterprises sometimes exploited legal structures to hide illicit financial activities. By mandating the disclosure of individuals who either control or hold significant ownership interests in such operations, the CTA bolsters anti-money-laundering measures. In simpler terms, the law shines a light on those who had previously been able to remain in the shadows, thereby making it more difficult to engage in illicit acts under the guise of a legitimate company.

2.2 Entities Affected

Small corporations, LLCs, and similar entities formed through state registration are squarely in the CTA’s crosshairs. Many of these smaller entities have never encountered significant federal disclosure requirements before, which means they may be caught off-guard. Although sole proprietorships and certain partnerships without formal state filing do not typically fall under the CTA, other organizations—particularly those with more complex ownership structures—must carefully evaluate their reporting obligations. Larger, publicly traded companies usually have their own disclosure frameworks, so they tend to be exempt from the CTA.

3. Key Filing Deadlines & Legal Developments

3.1 The March 21, 2025 Deadline

After a series of legal battles and temporary injunctions, the Financial Crimes Enforcement Network (FinCEN) has set March 21, 2025, as the new primary deadline for most existing entities to file their BOI reports. This revised date supersedes earlier deadlines and reflects the back-and-forth of court decisions that halted—then reactivated—CTA enforcement. For businesses established on or after January 1, 2024, filings may be due within a shorter window, so it is essential to confirm your specific due date if you formed (or plan to form) a new entity around that time.

3.2 Extensions and Other Exceptions

Although March 21, 2025, applies in most situations, keep in mind that certain companies have already obtained later deadlines—such as for disaster relief or other extraordinary circumstances. If you received such an extension, your original deferral stands, and you should adhere to that adjusted timeline. Meanwhile, FinCEN has indicated it may loosen or extend deadlines for lower-risk companies if doing so aligns with national security priorities. In addition, legislative proposals could shake things up further. One bill, for instance, seeks to postpone the general filing requirement to 2026, while another aims to repeal the CTA altogether. None of these measures are law yet, but they bear watching for any small business owner trying to stay ahead of regulatory shifts.

4. Beneficial Ownership Reporting Requirements

4.1 Definition of a Beneficial Owner

Under the CTA, a beneficial owner is an individual who holds at least a 25% ownership stake in the company or who exercises “substantial control” over its operations. This person must disclose basic personal information, including full legal name, date of birth, current address, and a unique identifying number drawn from government-issued documents such as a driver’s license or passport. These disclosures help authorities link real people to the legal entities that might otherwise hide behind paper filings. Though the rule may seem intrusive, it is geared toward curbing fraudulent shell operations and reinforcing the legitimate use of business entities.

4.2 Company Applicants

While reporting obligations mostly revolve around owners, the CTA also applies to “company applicants” for newly formed entities. That includes the individual who submits formation paperwork to a state—usually a business owner, attorney, or corporate service provider. By capturing this information at the outset, FinCEN hopes to ensure that future shell entities cannot hide behind anonymous incorporators. If your entity is fresh on the books, make sure you know who filed the state documentation and keep that information within easy reach for filing purposes.

5. Potential Penalties and Treasury’s Enforcement Stance

Technically, the stakes can be quite high for companies that ignore or misrepresent their BOI. Federal penalties may include hefty fines—up to $10,000 in total—and even prison time of up to two years for willful noncompliance. However, the U.S. Department of the Treasury has, for now, indicated it will not actively levy penalties on those who miss the initial filing deadline. This more lenient posture may give businesses a window of time to collect necessary data without immediately facing punitive measures. That said, reliance on temporary leniency is risky. The current enforcement environment may tighten at any time, especially if new legal or regulatory developments come into play.

Expert Quote: “The Treasury’s soft stance on penalties shouldn’t lull you into complacency. If you prepare and file on time, you’ll safeguard your business from shifting enforcement priorities and costly mistakes.” – Jamie Miller, CPA and Partner

6. Preparing Your Small Business for BOI Compliance

Establishing robust internal processes for beneficial ownership reporting may feel like a burden, but proactive steps can prevent confusion and ensure a smoother path to compliance.

6.1 Gather Necessary Documentation

First, identify each individual who meets the 25% ownership or substantial control criteria. Then, collect the required identification details: names, dates of birth, addresses, and suitable ID numbers. For many small businesses, merely obtaining a driver’s license number might suffice. Compile this data in a secure location, so you can easily reference it when you file.

6.2 Map Out Your Ownership Structure

Although certain small businesses have fairly straightforward rosters of owners, others may feature multiple layers of partnerships or foreign investors. If your company fits the more complex mold, invest time now in mapping out every node of your corporate tree. This step helps you pinpoint who truly ranks as a beneficial owner (or if some owners fail to meet the threshold) and reduces the chance of errors in your submission.

6.3 Stay Updated on Regulatory Changes

Given the potential for further legal challenges and legislative alterations, tracking FinCEN announcements isn’t just prudent—it’s essential. You may see filing extensions for lower-risk businesses or entirely new timelines if a pending bill in Congress gains traction. By monitoring these changes, you’ll avoid filing on the wrong date or submitting incomplete information based on outdated rules.

6.4 Use FinCEN’s Digital Filing System

The agency has streamlined reporting through an online platform at BOIefiling.FinCEN.gov, which does not require separate filing fees. If you have a more intricate ownership structure or simply want additional peace of mind, you can also engage professional advisors to confirm that each data point is accurate before submitting.

7. How MBN & Company Can Help

Navigating the maze of regulatory requirements can feel daunting for businesses of all sizes. At MBN & Company, our wide-ranging Business Advisory services reflect our deep expertise in key areas that matter to you:

We offer Business Valuations to help you clarify your ownership structure, Exit Planning to prepare for future transitions while staying compliant, and Forensic & Fraud Examinations to identify any potential vulnerabilities within your operations. Our On Demand Accounting & Advisory service further supports you with real-time consultations, ensuring that as deadlines or legislative details evolve, you remain aligned with the latest regulations. By combining specialized knowledge with a robust understanding of the CTA, we tailor our approach so that you’re not only meeting deadlines but also building a resilient framework for your business’s long-term success.

8. Conclusion

Beneficial ownership reporting may be new terrain, but it reflects a growing push toward transparency in the global business arena. Although current signals from the Treasury suggest a temporary reprieve on penalties, you should strive to meet the CTA’s requirements proactively. By understanding the law’s purpose, compiling accurate data, and monitoring regulatory updates, your small business can adapt seamlessly to the demands of beneficial ownership reporting. It’s an opportunity not just to fulfill a legal obligation, but also to strengthen trust in your organization and ensure you’re prepared for any future compliance challenges.

Expert(s) Information

Jamie Miller – CPA and Partner
Email: jmiller@marketingbynumbers.io
Jamie Miller has more than 15 years of public accounting experience, focusing on tax and business advisory for clients in construction, real estate, and not-for-profit sectors. He guides small businesses in setting up strong accounting processes, meeting compliance needs, and planning for growth.