Starting January 1, 2024, you may be required to report information about the individuals who own or control your company to the U.S. Department of Treasury’s Financial Crimes Enforcement Network, also known as FinCEN.
While certain companies will be exempt from this reporting requirement, most businesses formed in the United States will have to submit this information on or before the deadline. It is VERY important that you understand the process — because the last thing anyone wants is the Department of Treasury coming after them! So let’s dive in.
In this article:
- Effective January 1, 2024, all beneficial owners of an organization (with a few exceptions) must be reported to the Financial Crimes Enforcement Network.
- The purpose of this new requirement is to help prevent terrorists and other illicit individuals from hiding money or property within the United States.
- This new reporting requirement will impact many corporations — including LLCs — and there will be a penalty for those who do not comply before the deadline.
What is beneficial ownership information reporting?
In order to fully explain this, let’s travel back in time to 2021 when Congress passed the Corporate Transparency Act. This act was designed to “provide law enforcement with beneficial ownership information for the purpose of detecting, preventing and punishing terrorism, money laundering and other misconduct through business entities.” The Beneficial Ownership Information Reporting rule is a new requirement under the Corporate Transparency Act.
This reporting requirement essentially mandates that a majority of U.S.-registered companies will now have to disclose details about the company, the beneficial owners (individuals who own or control a minimum of 25 percent of a company), and in some cases, company applicants (individuals who filed or controlled the filing of the initial document that created the company).
How can business owners stay compliant?
You’re probably wondering what you have to do to stay compliant and stay out of trouble. Let’s go over the who, what, and how of this new reporting requirement:
Who must comply with beneficial ownership information reporting?
Most corporations, LLCs, and other business entities will be required to submit their information to FinCEN. In the simplest terms, if you are a domestic or foreign company that has registered to do business in the United States, and you created your company by filing with a secretary of state (or similar office), you are likely required to submit beneficial ownership information.
There are some exceptions to this — 23 of them, to be exact. Banks, credit unions, insurance companies, and tax-exempt businesses are all exempt. You can find a full list of exempt companies on the Beneficial Ownership Information Reporting FAQ page.
What information must you report?
For the company itself, you will have to provide:
- Legal Name
- Trade Names or DBA (“Doing Business As”) Names
- Current Address
- Location Where the Business was Formed
- Taxpayer Identification Number
For each beneficial owner and company applicant, you will have to provide:
- Legal Name
- Date of Birth
- Current Address
- Passport, State Driver’s License, or Other Identification Document
How do you report this information to FinCEN?
The information must be filed electronically through a secure system on FinCEN’s beneficial ownership information reporting page. There is no fee to file, and you will receive a confirmation of receipt once your information has been successfully submitted. This process does not have to be done every year, but if there are changes within your organization, you may be required to submit an updated or corrected report within 30 days of the change.
What’s the beneficial ownership information reporting deadline?
FinCEN started accepting information from companies on January 1, 2024. There are different deadlines, depending on when your business was created or registered:
- Businesses created or registered before January 1, 2024, will have until January 1, 2025 to file their first beneficial ownership information report.
- Businesses created or registered on or after January 1, 2024, will have 90 days to file their first beneficial ownership information report.
- Businesses created or registered after January 1, 2025, will have 30 days to complete the filing.
What happens if you don’t comply with the beneficial ownership information reporting requirement?
Now we know you’re probably wondering, “What happens if I don’t report this information before the deadline?” According to FinCEN’s FAQ page, you may face civil penalties up to $500/day and criminal penalties of up to $10,000 and/or up to 2 years imprisonment for willful non-filing.
Need help with staying compliant?
After careful consideration and extensive research, Landmark has determined we will not provide services to complete the BOI filing. However, we recommend the following options for assistance with filing the required report:
- Option 1: Contact your company’s attorney. If you would like a referral to an attorney that provides this service, please let us know.
- Option 2: You may file directly, and at no cost, with the Treasury Department at https://www.fincen.gov/boi. You can either complete the form online or upload a completed PDF version of the report. The PDF can be found on the FINCen website here.
- Option 3: The following companies can assist with the filing of the report or preparation of an entity’s organizational documents: BizFilings, Legal Zoom or another reputable service. This option may work best if you anticipate frequent changes in entity ownership. and is potentially less expensive than Option 1, but perhaps with the added risk of a lower level of technical expertise.
If you need help or have more questions about this new requirement, get in touch with us here.