Attention business owners! A significant regulatory change is on the horizon, and it’s one you can’t afford to ignore. Starting January 1, 2024, nearly all businesses operating in the United States will be required to file a Beneficial Ownership Information (BOI) report with the Financial Crimes Enforcement Network (FinCEN).
What is Beneficial Ownership?
Simply put, it’s about identifying the individuals who ultimately own or control your business, not just those listed on legal documents. This includes those with 25% or more ownership or significant control over voting rights or management decisions, such as corporate officers or directors.
Who needs to file?
The BOI requirement applies to most businesses, including:
- Corporations
- Limited Liability Companies (LLCs)
- Registered Foreign Branches
- Certain trusts and other business entities
Basically if you have any business entity registered with your state, local, or tribal government, you will likely be required to file a Beneficial Ownership report.
What information needs to be filed?
For each beneficial owner, you’ll need to provide:
- Name and date of birth
- Address
- Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
- Citizenship and country of residence
- Percentage ownership or control
How and when do you file?
Filing will be done electronically through FinCEN’s secure online portal. There are two deadlines to keep in mind:
- Companies formed before January 1, 2024: Have until January 1, 2025 to file their initial report.
- Companies formed after January 1, 2024: Must file within 30 days of formation.
Anytime any of the reportable information changes (e.g. the business gets a new address or owner), a new report must be filed to inform FinCEN of that change.
Why does this matter?
The BOI rule aims to combat financial crime and money laundering by increasing transparency around who owns and controls businesses. This can help law enforcement investigate suspicious activity and prevent illicit actors from using shell companies to hide their tracks.
What should you do now?
FinCEN has not yet finalized the online Beneficial Ownership report, but beginning January 1, 2024, you will be able to file such a report. Make sure to do so by the appropriate deadline for your business.
Don’t wait until the last minute! Take action now to ensure you’re compliant with the Beneficial Ownership Information rule and avoid potential penalties. Remember, transparency is key, and compliance is crucial for your business’s reputation and legal standing. Willful failure to file the Beneficial Ownership report can subject the beneficial owner of the business to a civil penalty of $500 for each day the violation continues, as well as criminal penalties that include a $10,000 fine and 2 years in prison.