As part of the updates to the 2021 Corporate Transparency Act goes into effect on January 1, the Financial Crimes Enforcement Network (FinCEN) is starting to send out notifications about the reporting requirements. Under the CTA, registered businesses (including LLCs) in the US are now required to complete a Beneficial Ownership Information report and file it with FinCEN.
This is part of a nationwide effort to crack down on corruption and money laundering activities.
These new reporting requirements will affect authors in the US who have registered as a corporation or an LLC (single member or otherwise).
But here are some of the main points:
- Businesses formed and operating PRIOR to January 1, 2024 will have until January 1, 2025 to file their BOI. (Whew, if you’re reading this and already have an LLC, we have a whole year to do it!).
- Businesses formed after January 1, 2024 will have 90 days to file their BOI.
- The information collected is stored in the FinCEN database for Corporate Transparency Act compliance.
But, let's break down some of the more complex terminology.
Only in my free time! At my day job, I work as a legal and regulatory compliance analyst, and that's actually how I became aware of these requirements being rolled out January 1st.
I may not have a fancy law degree, but I know how to do legal research, and more, I know my way around the US Dept. of Treasury's website to find where all the good resources and info are hiding. At a bare minimum, I am qualified to summarize these regulations and reporting requirements (otherwise I'd have been fired long ago).
Nothing in this blog post constitutes advice.
Now, where were we?
What is a Beneficial Owner?
A beneficial owner is any individual who, directly or indirectly:
- Exercises substantial control over a reporting company; or
- Owns or controls at least 25 percent of the ownership interests of a reporting company.
If the person who registered the business (i.e. filed the paperwork with your Secretary of State, or county clerk or whatever) is different from the ultimate beneficial owner, information will have to be provided on the person who registered the business as well.
What Information is Required from the Reporting Company?
- Full legal name of the business
- Any trade names or DBAs (doing business as)
- Complete and current US address (primary location in the US where the company conducts business; also called the principal address)
- State registration documentation
- IRS taxpayer identification number (TIN or EIN)
What Information is Required from Each Beneficial Owner?
- Full legal name
- Date of Birth
- Complete and current address (individual’s residential street address)
- Unique ID number and jurisdiction AND an image of one of the following non-expired documents: US passport, state drivers license, other identification document issued by a state, local, or tribal government
If you do not want your information to be displayed in FinCEN’s database, you can request a FinCEN identification number instead. It’s a unique identifying number that is provided upon request that FinCEN will issue to an individual or reporting company and can be used in place of certain information on the BOI report.
Um, in English please?
Before you file your BOI report, reach out and ask FinCEN identification number. You will be asked to provide the Beneficial Ownership information listed above. Once they verify your information, they will provide your FinCEN ID number. From there, you will then include the FinCEN ID number on the BOI report in the place of the Beneficial Owner info it asks for in the report filing.
What If I Just...Don't?
Failure to file your BOI can lead to criminal penalties of imprisonment for up to two years and/or a fine of up to $10,000, and a civil penalty of $500 per day.
Do I Need to Do This Annually?
As of right now, the guidance says you do not need to refile your BOI on a regular basis. Refiling would only be if there are errors or changes from your original report. If anything changes from the time you filed your initial report, you must file an amended report within 30 days after the change. Changes include:
- Change to any information for the reporting company (like a new DBA)
- Additions/removals of beneficial owners
- Change to existing beneficial owners information (name, address, etc.)
So What Do I Need to do RIGHT NOW?
You can't file your report until January 1, 2024 even if you wanted to. And if you're already registered as an LLC, you will have until January 1, 2025 to file it. So you have (theoretically) an entire year to come to peace with this.
I'm just a giant nerd and came across the announcement today and wanted to share so that people can begin wrapping their heads around it and putting it on their 2024 plans.
I Have A Lot More Questions
FinCEN has stated they understand this will potentially be a burdne on small businesses, like us, and they've taken steps to ensure that the process is as simple as possible. If you have more questions, check out the Small Entity Compliance Guide they put together. It is super detailed and helpful. They also have videos, FAQs, brochures, and other resources.
Additionally, if you filed your registration with LegalZoom or another similar provider, check with them. They'll likely be able to offer more advice, and might even take care of the filing for you.