What Startup Founders Need to Know About BOI Filing Requirements

If you run a startup structured as a C Corporation here’s an important update on the Beneficial Ownership Information (BOI) report—a legal filing requirement you may have heard about. While this might sound like dry legalese, it’s worth understanding, as it could affect your company in the coming months. The late penalties for the January 13, 2025 deadline are up to $591/day and up to 2 years in prison.

What’s the BOI Report, Anyway?

The BOI report is part of the Corporate Transparency Act (CTA). It’s a new federal rule that requires certain U.S. companies to report detailed information about their owners to FinCEN, a government agency.

The goal? Fight fraud and increase financial transparency.
The challenge? It introduces a lot of new compliance work for small businesses and startups.

The original deadline to file the BOI report was January 13, 2025. But here’s where it gets complicated:

What’s Happening Right Now?

On December 3, 2024, a U.S. court blocked the BOI reporting requirement by issuing a preliminary injunction.

• What’s a Preliminary Injunction?
  Think of it as a temporary "pause button." The court said, “We’re not convinced this rule is fair or constitutional, so businesses don’t have to follow it for now.”

However, this pause isn’t permanent. It’s a decision to hold things off while the case gets a deeper review.

The Government’s Response: An Appeal

Two days later, on December 5, 2024, the U.S. Attorney General filed an appeal against the court’s decision.

• What’s an Appeal?
  This is when one side in a legal case says, “We don’t agree with this ruling, so we’re asking a higher court to take another look and potentially overturn it.”

The appeal will be reviewed by the Fifth Circuit Court of Appeals, which now has to decide whether to uphold the injunction or allow the BOI deadline to move forward as planned.

What Happens Next?

While the appeal is being reviewed, the preliminary injunction (the "pause button") usually stays in place. That means, as of today, you don’t have to file the BOI report.

However, there’s a catch:

• If the appeal moves quickly and the government wins, the original January 13, 2025 deadline could be back on.
• If you don’t file by the deadline and the injunction is overturned, you could face steep penalties: $500 per day for non-compliance.

What Should Founders Do?

1. Understand Your Risk
   Filing the BOI report could be a big privacy concern, especially for startups with complex ownership or founders who prefer to keep personal details confidential.
2. On the flip side, waiting comes with a risk. If the appeal succeeds, you could owe late fees if you don’t act fast.
3. Be Ready to File
   Even if you decide not to file now, have your information ready just in case. That means gathering details like:
   • Names and addresses of all beneficial owners.
   • Ownership percentages or voting rights in the company.
4. Stay Updated
   The appeal might not be resolved until after December 31, or it could wrap up before then. If the government wins, you’ll need to act quickly.

What About Businesses That Already Filed?

Here’s another wrinkle: an estimated 6.5 million businesses have already filed their BOI reports. If the court ultimately finds the rule unconstitutional, it’s unclear what will happen to that data.

What’s at Stake?

For founders, this is more than just a legal battle—it’s a balance between privacy, compliance, and risk. The BOI requirement might sound like one more piece of red tape, but failing to act could mean costly penalties that no startup can afford.

If you’re unsure how this applies to your business, now’s the time to consult your lawyer or accountant.

Final Thoughts for Founders

The BOI report filing requirement is a moving target, and the rules could change quickly. For now:

• Monitor the case.
• Be ready to act if the January 13 deadline comes back.
• Seek advice if you’re uncertain about your next steps.

Startups thrive on agility, and this is one of those moments where staying informed will keep your business out of hot water.

This post is for informational purposes only and not legal advice. Always consult a qualified professional for specific guidance.

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Disclaimer

This blog for informational purposes only and does not constitute legal or tax advice or create an attorney-client relationship. Companies should consult their own attorneys or tax accountants for advice on these issues. Because of the generality of the issues discussed in this piece, the information provided may not apply in all situations and should not be acted upon without specific legal or tax advice based on particular situations.