New Requirement for Businesses: Filing a Beneficial Ownership Information Report with FinCEN may be required
Starting January 1, 2024, many U.S. businesses will be required to file a Beneficial Ownership Information (BOI) Report with the Financial Crimes Enforcement Network (FinCEN). This new rule, part of the Corporate Transparency Act (CTA), aims to increase transparency in business ownership and help combat money laundering and financial crimes. Refer to https://www.fincen.gov/boi for current information.
What Is Beneficial Ownership?
Beneficial owners are the individuals who own or control a company, even if their names aren't on official documents. This could include someone with significant ownership or control, such as someone holding 25% or more of a company's shares or who has substantial decision-making power. The new filing requirement ensures that the U.S. government knows who is ultimately behind a business.
Who Needs to File?
The BOI reporting requirement primarily applies to small businesses, including most corporations and LLCs. However, exemptions exist for:
Large, regulated entities (like banks and publicly traded companies).
Inactive businesses.
Certain regulated industries.
Typically, businesses with fewer than 20 employees and less than $5 million in revenue must file. Exemptions may apply to other business types, so it’s crucial to check whether your company qualifies.
What Information Must Be Reported?
Businesses must submit basic information about each beneficial owner, including:
Full legal name
Date of birth
Address
Government-issued identification (e.g., passport or driver’s license)
In addition, businesses will need to disclose the ownership percentage or control structure.
How to File
The BOI report is filed electronically via the FinCEN portal. Companies must file within 30 days of formation or registration and update the report within 30 days of any changes in ownership or control.
Penalties for Non-Compliance
Failure to file the report or providing false information could result in civil penalties of up to $500 per day or criminal penalties, including fines up to $10,000 and potential imprisonment.
Conclusion
The new BOI reporting requirements are part of a broader push to create a more transparent and secure financial system. If your business is affected, ensure timely and accurate filing to avoid penalties and support the integrity of the U.S. business environment. Consider consulting a professional to guide you through the process.
Disclaimer
The information provided in this blog post is for general informational purposes only and is not intended as legal advice. For specific guidance regarding your business's obligations under the Corporate Transparency Act or any other legal matters, consult with a qualified attorney or legal professional.
