CTA, FinCEN, BOI – Why Entity Owners Need to Know These Abbreviations in 2024 to Avoid Big Penalties

 

The Corporate Transparency Act (CTA) was established by the Financial Crimes Enforcement Network (FinCen) as part of the 2020 Anti-Money Laundering Act. If you have an LLC, which many of us do for our real estate investing, then these new guidelines pertain to you. But it is not limited to just LLCs created for real estate investing. This act requires reporting for active business entities such as LLCs, corporations, and limited partnerships (“Reporting Companies”).  If you would like more in depth information on the CTA, please see this article from attorney Mauricio Rauld, and the additional resources below. 

I mentioned penalties in my title… 

If you own 25% or more of your LLC/entity (Beneficial Ownership Interest, or BOI) and fail to file the necessary reports, you will be subject to possible penalties of $500/day to a max of $10,000 and/or two years in a hoosegow. I cannot speak to how the government will enforce these requirements or inflict such stiff penalties, but I just know with such steep fines at stake, this is not my battle or flag-planting moment to pick with the federal government. 

Now, those of you who know me well understand that I am not a huge fan of technology, and I love the government and its ability to overregulate even less. But below both of those is spending money on things I can do myself, so I recently decided to try and tackle the reporting for all of my LLCs on my own.  

I enthusiastically admit that the ease and time involved far exceeded my expectations. And it did not cost any money!  

I need to stress that I am neither a lawyer nor a CPA so what I am providing should not be interpreted as advice. Please speak with your team of experts and decide what is best for you. However, in the time it took me to eat a 7-inch, Jersey Mike’s Big Kahuna sandwich, I had filed my reports and downloaded the confirmation for each. If, after speaking with your advisors, you also choose to self-file, set aside roughly 5 minutes for each report.  

The ability to comply with these new regulations began on January 1, 2024. Go to the following link to file your report: https://www.fincen.gov/boi. 

I chose the “File Online” vs. “File PDF” option as it sounded simpler (i.e. required fewer steps).  Here is the information you will need for each entity: 

  • Name
  • Birthdate
  • Name of entity 
  • EIN of entity 
  • Email address 
  • Physical address 
  • Government-issued identifying number such as your driver’s license or passport number 
  • A saved JPG image of the above 

*I would recommend doing this on a computer vs. a phone or tablet given that there are several screens and fields to complete. 

Surprisingly, the government has provided a clear step-by-step process of explaining the screens and fields that you can read beforehand (see links below).  Also, many of the fields have pop-up information buttons to help explain their meanings should you get stuck along the way. 

Upon completion, you can download a copy of your report (highly recommended) which acts as your confirmation and provides you with a newly created BOIR ID unique to each LLC/entity report.  

 

Deadlines 

Does all of this still sound daunting and intimidating to you? Have no fear! If your LLC/entity was created before January 1, 2024, you have until January 1, 2025 to file. If you are starting an LLC/entity this year, you have 90 days after formation to comply with the terms of these new regulations. So regardless of your situation, you have some time. Still not up for the challenge? CPAs will provide information on these new guidelines/requirements; however, most consider it to be of legal nature and will not file the reports for you.  So, be sure to educate yourself by reading up on the CTA and decide if you have the time to file yourself or if you want to pay a lawyer to file for you. Depending on your relationship with your advisors, they may not charge you like mine offered, but what else was I doing in between bites of my tasty sandwich?! 

 

Additional resources: 

  • Introduction to Beneficial Ownership Information Reporting:   

https://www.fincen.gov/sites/default/files/shared/BOI%20Informational%20Brochure%20508C.pdf 

*Provides the background of why the government is asking for these reports.  

  • Q &A:  

https://boiefiling.fincen.gov/help 

*The resources in this link are PDFs so I did not want to attach them here, but the last bullet listed within (Online Step-by-Step Instructions) is incredibly helpful. 

 

Sean Donnelly is one of the founders of Left Field Investors. He began investing in real estate in 2007 when he bought a flip at auction with a friend.  While the market tanked shortly after, the multifaceted benefits of real estate investing became clear.  He currently owns single family and duplex rentals but has shifted to investing primarily  in passive commercial real estate syndications.

This article is for educational purposes only and is not to be relied upon as the basis for entering into any transaction or advisory relationship or making any investment decision. All investments involve the risk of loss, including the loss of principal. Past performance, and any performance results reflected in this article, is not an indication of future results.

                                                                                             

Chris Franckhauser

Vice President of Strategy & Growth, Advisory Partner

Chris Franckhauser, Vice President of Strategy & Growth, Advisory Partner for Left Field Investors, has been involved in real estate since 2008. He started with one single-family fix and flip, and he was hooked. He then scaled, completing five more over a brief period. While he enjoyed the journey and the financial tailwinds that came with each completed project, being an active investor with a W2 at the time, became too much to manage with a young and growing family. Seeing this was not easily scalable or sustainable long term, he searched for alternative ideas on where to invest. He explored other passive income streams but kept coming back to his two passions; real estate and time with his family. He discovered syndications after reconnecting with a former colleague and LFI Founder. He joined Left Field Investors in 2023 and has quickly immersed himself into the community and as a key member of our team.  

Chris earned a B.S. from The Ohio State University. After years in healthcare technology and medical devices, from startups to Fortune 15 companies, Chris shifted his efforts to consulting and owning a small apparel business when he is not working with LFI (Left Field Investors) or on his personal passive investments. A few years ago, Chris and his family left the cold life in Ohio for lake life in the Carolinas. Chris lives in Tega Cay, South Carolina with his wife and two kids. In his free time, he enjoys exploring all the things the Carolinas offer, from the beaches to the mountains and everywhere in between, volunteering at the school, coaching his kids’ sports teams and cheering on the Buckeyes from afar.  

Chris knows investing is a team sport. Being a strategic thinker and analytical by nature, the ability to collaborate with like-minded individuals in the Left Field Community and other communities is invaluable.  

Jim Pfeifer

President, Chief Executive Officer, Founder

Jim Pfeifer is one of the founders of Left Field Investors and the host of the Passive Investing from Left Field podcast. Left Field Investors is a group dedicated to educating and assisting like-minded investors negotiate the nuances of the passive investing landscape and world of syndications. Jim is a former financial advisor who became frustrated with the one-path-fits-all approach of the standard financial services industry. Jim now concentrates on investing in real assets that produce cash flow and is committed to sharing his knowledge with others who are interested in learning a different way to grow wealth.

Jim not only advises and helps people get started in passive real estate syndications, he also invests alongside them in small groups to allow for diversification among multiple investments and syndication sponsors. Jim believes the most important factor in a successful syndication is finding a sponsor that he knows, likes and trusts.

He has invested in over 100 passive syndications including apartments, mobile homes, self-storage, private lending and notes, ATM’s, commercial and industrial triple net leases, assisted living facilities and international coffee farms and cacao producers. Jim is constantly looking for new investment ideas that match his philosophy of real assets producing cash flow as well as looking for new sponsors with whom he can build quality, long-term relationships. Jim earned a degree in Finance & Marketing from the University of Oregon and a Master’s in Business Education from The Ohio State University. He has worked as a reinsurance underwriter, high school finance teacher, financial advisor and now works exclusively as a full-time passive investor. Jim lives in Dublin, Ohio with his wife, three kids and two dogs. In his free time, he loves to ski, play Ultimate frisbee and cheer on the Buckeyes.

Jim earned a degree in Finance & Marketing from the University of Oregon and a Master’s in Business Education from The Ohio State University. He has worked as a reinsurance underwriter, high school finance teacher, financial advisor and now works exclusively as a full-time passive investor. Jim lives in Dublin, Ohio with his wife, three kids and two dogs. In his free time, he loves to ski, play Ultimate frisbee and cheer on the Buckeyes.

Chad Ackerman

Chief Operating Officer, Founder

Chad is the Founder & Chief Operating Officer of Left Field Investors and the host of the LFI Spotlight podcast. Chad was in banking most of his career with a focus on data analytics, but in March of 2023 he left his W2 to become LFI’s second full time employee.

Chad always had a passion for real estate, so his analytics skills translated well into the deal analyzer side of the business. Through his training, education and networking Chad was able to align his passive investing to compliment his involvement with LFI while allowing him to grow his wealth and take steps towards financial freedom. He has appreciated the help he’s received from others along his journey which is why he is excited to host the LFI Spotlight podcast and share the experience of other investors and industry experts to assist those that are looking for education for their own journey.

Chad has a Bachelor’s Degree in Business with a Minor in Real Estate from the University of Cincinnati. He is working to educate his two teenagers in the passive investing world. In his spare time he likes to golf, kayak, and check out the local brewery scene.

Ryan Steig

Chief Financial Officer, Founder

Ryan Stieg started down the path of passive investing like many of us did, after he picked up a little purple book called Rich Dad, Poor Dad. The problem was that he did that in college and didn’t take action to start investing passively until many years later when that itch to invest passively crept back up.

Ryan became an accidental landlord after moving from Phoenix back to Montana in 2007, a rental he kept until 2016 when he started investing more intentionally. Since 2016, Ryan has focused (or should we say lack thereof) on all different kinds of investing, always returning to real estate and business as his mainstay. Ryan has a small portfolio of one-to-three-unit rentals across four different markets in the US. He has also invested in over fifty real estate syndication investments individually or with an investment group or tribe. Working to diversify in multiple asset classes, Ryan invests in multi-family, note funds, NNN industrial, retail, office, self-storage, online businesses, start-ups, and several other asset classes that further cement his self-diagnosis of “shiny object syndrome”.

However, with all of those reaches over the years, Ryan still believes in the long-term success and tenets of passive, cash-flow-focused investing with proven syndicators and shared knowledge in investing.

When he’s not working with LFI or on his personal passive investments, he recently opened a new Club Pilates franchise studio after an insurance career. Outside of that, he can be found with his wife watching whatever sport one of their two boys is involved in during that particular season.

Steve Suh

Chief Content Officer, Founder

Steve Suh, one of the founders of Left Field Investors and its Chief Content Officer, has been involved with real estate and alternative assets since 2005. Like many, he saw his net worth plummet during the two major stock market crashes in the early 2000s. Since then, he vowed to find other ways to invest his money. Reading Rich Dad, Poor Dad gave Steve the impetus to learn about real estate investing. He first became a landlord after purchasing his office condo. He then invested passively as a limited partner in oil and gas drilling syndications but quickly learned the importance of scrutinizing sponsors when he stopped getting returns after only a few months. Steve came back to real estate by buying a few small residential rentals. Seeing that this was not easily scalable, he searched for alternative ideas. After listening to hundreds of podcasts and attending numerous real estate investing meetings, he determined that passively investing in real estate syndications was the best avenue to get great, risk-adjusted returns. He has invested in dozens of syndications involving apartment buildings, self-storage facilities, resort properties, ATMs, Bitcoin mining funds, car washes, a coffee farm, and even a Broadway show.

When Steve is not vetting commercial real estate syndications in the evenings, he is stomping out eye diseases and improving vision during the day as an ophthalmologist. He enjoys playing in his tennis and pickleball leagues and rooting for his Buckeyes and Steelers football teams. In the past several years, he took up running and has completed three full marathons, including the New York City Marathon. He is always on a quest to find great pizza, BBQ brisket, and bourbon. He enjoys traveling with his wife and their three adult kids. They usually go on a medical mission trip once a year to southern Mexico to provide eye surgeries and glasses to the residents. Steve has enjoyed being a part of Left Field Investors to help others learn about the merits of passive, real asset investments.

Sean Donnelly

Chief Culture Officer, Founder

Sean holds a W2 job in the finance sector and began his real estate investing journey shortly after earning his MBA. Unfortunately, it could not have begun at a worse time … anyone remember 2007 … but even the recession provided worthy lessons. Sean stayed in the game continuing to find his place, progressing from flipping to owning single and multi-family rentals to now funding opportunities through syndications. While Sean is still heavily invested in the equities market and holds a small portfolio of rentals, he strongly believes passive investing is the best way to offset the cyclical nature of traditional investment vehicles as well as avoid the headaches of direct property ownership. Through consistent cash flow, long term yield and available tax benefits, the diversification offered with passive investing brings a welcomed balance to an otherwise turbulent investing scheme. What Sean likes most about the syndication space is that the investment opportunities are not “one size fits all” and the community of investors genuinely want to help.

He earned a B.S. in Finance from Iowa State University in 1995 and a MBA from Otterbein University in 2007. Sean has lived in eight states but has called Ohio home for the last 20+.  When not attending his children’s various school/sporting events, Sean can be found running, golfing, shooting or fly-fishing.

Patrick Wills

Chief Information Officer, Advisory Partner

An active real estate investor since 2017, Patrick Wills’ investing journey began like many others – after reading the “purple book” by Robert Kiyosaki. Patrick started with single family rentals, and while they performed well, he quickly realized their inability to scale efficiently while remaining passive. He discovered syndications via podcasts and local meetups and never looked back. He joined Left Field Investors in 2022 as a member and has quickly become an integral part of the team as Vice President of Technology.

An I.T. Systems Engineer by trade, he experienced the limitations of traditional Wall Street investing firsthand in his career and knew there had to be a better way to truly have financial freedom.

Unfortunately, that better way is inaccessible to those who need it most. His mission is to make alternative investments accessible to everyone who seeks to take control of their financial future and to pursue their passions in life.

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