Beginning in 2024, many small businesses will have to report
information about their owners to the Financial Crimes Enforcement Network
(commonly referred to as FinCEN), a bureau of the U.S. Department of the
Treasury that collects and analyzes information to help fight financial
crimes. Here is what you need to know.
Determine if your business must comply with the new
reporting rules. Any company created in the United States that has registered
with a secretary of state or any similar office under the laws of a state
or Indian tribe, or foreign companies registered to do business in the
U.S., must comply with these new reporting requirements.
Many small businesses that are C corporations, S corporations,
partnerships, or LLCs (including single-member LLCs) must comply. There
are, however, nearly two dozen types of businesses that are exempt from
these new reporting requirements, including sole proprietors, accounting
firms, insurance companies, banks, certain large businesses, and tax-exempt
entities.
Know when you MUST report. The reporting deadline
varies depending on when your business was created or registered:
Created before January 1, 2024. For existing companies
that were created before January 1, 2024, you must file your FinCEN report,
commonly referred to as a Beneficial Ownership Information (BOI) report,
sometime this year (before January 1, 2025).
Created during 2024. Companies formed this year have 90 days
to file their FinCEN BOI report after they are created or registered.
Created in 2025 and beyond. The BOI report must be
filed within 30 days of being registered or legally created.
Immediately report any changes. After your initial
BOI report is filed, an updated BOI report must be filed within 30 days
following any change in information previously filed with FinCEN. Any
inaccuracies discovered on previously-filed reports must also be reported
within 30 days.
Why they want to know. The Federal government wants to know who
owns or is a beneficial owner of businesses in the U.S. This information is
meant to protect national security by making it easier to find corruption,
money laundering operations, tax evasion, and drug trafficking
organizations. They will be sharing this information with approved agencies
including Federal and State law enforcement and Federal tax authorities.
There are penalties for noncompliance. You may be liable for
up to $5,000 or more in fines for each defined violation for non-compliance
or false information provided on the form. There are also daily fines for
potential errors and omissions.
Where to register and learn more. When filing, be
prepared to not only identify owners and beneficial owners of your
business, but also be prepared to submit visual proof of each owner’s
identity (i.e. Driver’s license, passport, etc.) Click here to learn more: www.fincen.gov/boi
Remember,
existing companies have until the end of 2024 to complete their BOI report,
and FinCEN just put the reporting system live in early January 2024. So
don’t delay, but you may wish to wait a bit to ensure the reporting tool is
working properly.
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