Beginning this year, your small business may be one of millions dealing with additional reporting requirements. Yes, you heard that right.
Many LLCs, S-corps and C-corps will have new reporting requirements under the Corporate Transparency Act (CTA). In a nutshell, this mandate is intended to help mitigate money laundering by requiring certain businesses’ “beneficial owners” to report their Beneficial Ownership Information (BOI). The goal? To help the Financial Crimes Enforcement Network (FinCEN) establish a national database that can be utilized by national security and law enforcement agencies to combat criminal activities.
So what might this mean for you?
Determining beneficial ownership
Are you a beneficial owner? The beneficial owners of a reporting company can be categorized into two groups:
- Individuals who exercise substantial control over a reporting company
- Individuals who own or control 25% or more of a reporting company’s ownership interests
Keep in mind, actual ownership in the company is not a requirement. If you’re a CEO, COO, CFO or president, you may qualify as a beneficial owner.
Providing BOI to FinCEN
All beneficial owners must submit the following:
- Full legal name
- Date of birth
- Street address
- Unique ID number which can be obtained from a non-expired US passport, state driver’s license or other government-issued ID
Filing on time
Your reporting due date depends on when your company was created or registered:
- Before 2024: January 1, 2025
- In 2024: Within 90 days of its creation or registration
- After 2024: 30 days to file the initial report
If there are any changes made to your company’s beneficial owners, an updated report must be filed within 30 days. Failure to file both initial and updated reports can result in costly penalties, fines and even possible jail time.
All BOI reports must be filed electronically through FinCEN’s e-filing portal. You may choose to complete or a web-based version of the form or upload a completed PDF version. It’s generally an easy, straightforward process with no associated fees.
Ensuring compliance with BOI reporting requirements
By taking the necessary steps to meet these obligations, you can keep your business in good standing, while contributing to the prevention of money laundering.
For more details on these reporting requirements, check out the Small Entity Compliance Guide or consult your legal counsel for guidance.