File BOI Reports Early vs. End-of-Year: Important Considerations

The Corporate Transparency Act (CTA) mandates beneficial ownership information (BOI) reporting for millions of entities be filed by the end of 2024. Some entities have only 90 days from formation to file their first report.

Now the question arises for those reports not due until December 31, 2024 – do professionals wait until the end of the year to file reports for my clients or do I start to file reports now? Given the current legal challenges and operational implications, let’s take a detailed look at the pros and cons of filing now versus waiting until the end of the year.

Filing at the End of the Year

Legal Uncertainty

Many CPAs and lawyers have been advising clients to delay filing due to a pending court case challenging the CTA’s constitutionality. The ruling on March 1 applied an injunction to a narrow set of businesses, specifically members of the National Small Business Association, not to all entities that fall under the reporting requirements.

Although it’s true that the settlement of the case could affect more than just the plaintiffs, based on typical appeal schedules, a final resolution is not expected until the last months of the year. Now, for any new entities that are formed in 2024, reports need to be filed within 90 days of formation, since the obligations are still active for those entities.

Unless there is an acceleration in the appeals process, a final resolution is not expected until the last months of the year. Although technically, all entities except the plaintiffs are still required to file, this legal uncertainty has led to a cautious approach for entities whose due date is December 21, 2024.

Avoiding Immediate Updates

Filing early triggers a 30-day deadline for any required updates. Delaying the initial filing means updates are not required until the first report is submitted, potentially reducing the administrative burden throughout the year.

An analysis of the entity may lead to the conclusion that it may have lots of updates that will need to be filed, others may result in the prediction that there will be very few events in the next couple of years that could require any updates.

Prioritization of Resources

For firms with multiple projects and limited resources, end-of-year filing allows prioritization of more urgent tasks.

Filing Now

Reducing Year-End Rush

Filing early can significantly reduce the end-of-year rush, ensuring that resources are not overwhelmed by a last-minute surge.

This is particularly crucial for firms managing multiple clients, where the volume of work could be substantial. Some firms practicing in this area have decided to accelerate billing rates entering into Q4, incentivizing certain clients to initiate their filings early.

The quieter months, for those with that luxury, can be utilized to thoroughly review and understand complex client structures, ensuring accurate and compliant reporting. This detailed approach is less feasible during the busy year-end period.

New Revenue Streams

Early filing positions firms as first movers, potentially capturing a larger share of the market for BOI reporting services. This can establish a new revenue stream and build long-term client relationships. Early filing can even lock in cheaper pricing for reporting software, as many providers offer incentives for early access as well.

Adequate Time for Information Gathering

Collecting personal details and other necessary information from clients can be time-consuming. Starting early ensures ample time to track down the right information and verify the accuracy, reducing the risk of errors or omissions. This is beneficial to professionals and for the business owners that will be liable for the accuracy of the reports.

So, Should I File BOI Reports Early vs. End-of-Year?

Deciding whether to file BOI reports early or wait until the end of the year involves weighing legal, operational, and strategic considerations.

Entities with simple structures or those facing resource constraints may benefit from delaying their filings, leveraging the additional preparation time and avoiding immediate update requirements.

Conversely, early filing can mitigate year-end pressures, allow thorough review of complex structures, and capitalize on cost savings and market opportunities. Each entity must assess its unique circumstances and choose the approach that best aligns with its operational capabilities and strategic goals.
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Should I File BOI Reports Early vs. End-of-Year?