An Intro to the BOI Reporting Rules

One of the common question about BOI Reporting is which entities must file and which are exempt. 

The official FAQs page from FinCEN gives the following information:

Companies required to report are called reporting companies. There are two types of reporting companies:

• Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
• Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.

FinCEN also provides the following flow chart in their FAQs:

A Practical Explanation of Which Entities Must File

As we can see in the above chart, virtually all small business dental practices will be required to file a BOI Report. This includes PLLCs, PC, PAs, Dental Corporations and similar, whether they file taxes as a Disregarded Entity, S-Corporation, or C-Corporation. 

Don't forget about your non-dental entities as well. Generally speaking, any LLC or similar entity that you created for a real estate holding, vacation property, side business, etc must also file. So it is possible a dentist with multiple LLCs will need to file a BOI Report multiple times for each of them.

The primary trigger is filing articles with your state's Secretary of State office (e.g. filing for your LLC with the Secretary of State). Therefore sole proprietorships are not required to file as they are the simplest form of business (without legal protections) formed when someone simply begins doing business in their own name. 

Most dental practices do not operate as a sole proprietorship but some “side hustle” at home businesses may operate this way and would not need to file. 

Exemptions From Filing

There are 23 total potential exemptions, of which FinCEN's Small Entity Compliance Guide has the full list. But the two most likely to potentially apply to MLW clients are: 

1. Large operating company – to qualify for this status an entity must meet 6 criteria, the most important of which are:
   1. The entity must have more than 20 full time employees (full time generally meaning 30 hours or more per week) within the U.S.
   2.  The entity must have gross receipts or sales of greater than $5 million as filed on their most recent tax return on income generated within the U.S.
2.  Inactive Entity – to qualify for this an entity must have been in existence prior to January 1st, 2020 and not be actively engaged in any business, nor have had any changes in ownership over the prior 12 months, and cannot have sent or received funds of greater than $1,000 in the prior 12 months, and cannot hold any type of assets. 
   1. For MLW clients, this practically means it is possible an old LLC that was formed years ago and then mostly forgot about may be exempt from filing. Although it also doesn't hurt to file for these entities just to be safe.