You run a small business in the U.S. and want to stay on the right side of regulations. As of 2024, you’ll need to start filing annual reports with FinCEN, the Financial Crimes Enforcement Network, on your company’s beneficial owners. The Corporate Transparency Act legislation requires most U.S. companies to disclose individuals who own or control at least 25% of their ownership stakes or voting rights. Whether you’re filing as an LLC, partnership or corporation, you’ll need to provide details on these beneficial owners to comply with the new rules. Miss the deadline and you could face civil and criminal penalties.
What Is the Corporate Transparency Act and Beneficial Ownership Reporting?
What Is the Corporate Transparency Act and Beneficial Ownership Reporting?
The Corporate Transparency Act requires certain U.S. companies to report their true, or “beneficial,” owners to FinCEN. Beneficial owners are the natural persons who ultimately own or control a company. Reporting this information helps prevent the misuse of companies for illegal activities like money laundering, tax evasion, and terrorist financing.
If your company was formed or registered to do business in the U.S. after January 1, 2024, you likely need to file a report with FinCEN disclosing your company’s beneficial owners within 3 months of incorporation. Some exemptions apply, including for publicly traded companies. FinCEN will use the reported information to verify identities and monitor transactions. The data will not be public.
You must file FinCEN Form BOI, also called the Beneficial Ownership Information form. It asks for details like the beneficial owners’ names, addresses, dates of birth, and government ID numbers. You will file the form electronically through FinCEN’s BOI e-filing system and will need to set up an account to access the system.
Failing to comply with the reporting requirements may result in civil and criminal penalties, including fines. So make sure you understand if the rules apply to your company and file reports on time. This legislation helps strengthen national security, so do your part to provide transparency into beneficial ownership.
Who Needs to File a Beneficial Ownership Report With FinCEN?
If you own or control a U.S. company, you may need to file a Beneficial Ownership Report with FinCEN by the end of 2024. FinCEN, the Financial Crimes Enforcement Network, now requires certain corporations, LLCs, and similar entities to report their true “beneficial owners” – the individuals who ultimately own or control the entity.
Who exactly needs to file?
Most U.S. companies will be required to file, with some exceptions like publicly traded companies. Specifically, you must file if:
- Your company was formed or registered after January 1, 2020.
- Your company has been operating but has not yet filed a report.
- There has been a change in ownership or control that requires updating your company’s previous report.
The reporting requirement applies regardless of industry, entity type, or ownership structure. Both domestic and foreign-owned U.S. companies must comply.
What information do you need to report?
For each beneficial owner, you will need to provide their full legal name, birthdate, address, and a unique identifying number (Social Security number, passport number, or driver’s license number). You must also disclose details about the ownership or control relationship, such as the number of shares owned or the controlling position held.
The reporting process is done electronically through FinCEN’s Beneficial Ownership Secure Filing system. You will need to create an account, provide information about your company and its beneficial owners, and certify that the report is complete and accurate. FinCEN may follow up to request additional details or documentation to verify the report.
With the corporate transparency law now in effect, making sure your company’s beneficial ownership report is filed properly and on time should be a top priority. The penalties for willful failure to report can be severe, including criminal prosecution. But by complying fully and transparently, you help make the U.S. financial system stronger and more secure.
When Is the Deadline for Filing Beneficial Ownership Reports?
The deadline for companies to file their initial Beneficial Ownership Reports with FinCEN is coming up fast. All U.S. corporations, limited liability companies, and similar entities will need to disclose identifying information about their beneficial owners by the end of 2024.
When exactly is the deadline?
The specific deadline depends on when your company was formed:
- Existing companies have until the end of 2024 to file.
- Newly formed companies have 3 months from their date of formation to file their initial reports.
After the initial report, companies will need to file updated reports within 30 days of any changes in beneficial ownership or if any other previously reported information becomes inaccurate. Annual filings are not required.
The BOI eFiling system is now open for companies to start submitting their reports ahead of the deadlines. We recommend filing as soon as you have the required information to avoid any last minute issues. It may take time to track down owners, obtain signatures, and compile the details for your report.
These new reporting requirements aim to prevent the illicit use of anonymous shell companies for money laundering and other financial crimes. Failing to comply can result in civil and criminal penalties, so be sure your company’s beneficial ownership information is filed accurately and on time.
If you have any questions about your company’s reporting obligations or how to file in the BOI eFiling system, consult the FinCEN website or contact their helpline for assistance. The time to act is now to ensure you meet the important new beneficial ownership reporting requirements.
How and Where to File Your Company’s Beneficial Ownership Report
Now that you know you need to file a Beneficial Ownership Report for your company by the end of 2024, it’s time to figure out how and where. The process is fairly straightforward, but the details matter, so pay close attention.
File Online
BOI E-Filing is the electronic filing system created by FinCEN specifically for submitting Beneficial Ownership Reports. You will need to register for an account on the BOI E-Filing website and provide some basic information about your company like your EIN/SSN. File here.Â
Who Should Submit the Filing?
The individual submitting the report on behalf of the company, known as the reporting company must be an officer, director, or authorized representative. They will need to certify that the information provided is complete and accurate.
What Information Do You Need?
To file the report, you will need details on the beneficial owners of your company, including full legal names, dates of birth, addresses, and the percentage of ownership for each individual. Make sure you have all this information compiled and double check that it is correct before beginning your filing.
Deadline for Filing
Companies formed or registered after January 1, 2024 will need to file a Beneficial Ownership Report within 14 days of formation or registration. Companies formed on or before January 1, 2024 will need to file their initial report by January 1, 2025 and update reports within one year of any changes. After the initial filing, companies must submit updated reports within one year of any changes to the beneficial ownership or control of the company.
Submitting your company’s Beneficial Ownership Report in a timely and accurate manner is important for both regulatory compliance and transparency. Although the process seems straightforward, don’t hesitate to contact FinCEN directly if you have any questions or need clarification on the filing requirements. The goal is for all companies, big and small, to understand and fulfill this critical obligation.
Frequently Asked Questions About FinCEN Beneficial Ownership Reporting
You likely have a few questions about the new FinCEN Beneficial Ownership Reporting requirements. Here are some of the most frequently asked questions to help clarify what you need to know.
Who exactly needs to file a report?
Any U.S. company that was formed after January 1, 2021 is required to file a report with FinCEN disclosing its beneficial owners. This includes corporations, limited liability companies, and other similar entities. Existing companies formed before 2021 will need to file reports by the end of 2024.
What information needs to be included in the report?
The report must identify each beneficial owner of the company, including their full legal name, birthdate, address, and unique identifying number from an acceptable ID like a passport or driver’s license. You’ll also need to provide details about the ownership interest of each beneficial owner, such as the number of shares or the percentage of ownership.
How often do reports need to be filed?
Reports need to be filed within 14 days of any changes in beneficial ownership or when a company is formed. An annual report confirming there have been no changes is also required, even if there were no updates to ownership during the year. It’s best to file reports as ownership changes occur to avoid missing important deadlines.
What are the penalties for not complying?
Failure to comply with the FinCEN reporting requirements can result in civil and criminal penalties for both the company and its beneficial owners. Penalties range from $500 to $10,000 per day for ongoing violations as well as potential jail time for willful violations. It’s critical for both new and existing companies to understand and comply with these rules.
Where and how do I file the required reports?
All FinCEN Beneficial Ownership Reports must be filed electronically through the FinCEN website. You will need to create an account, provide details about your company and its beneficial owners, and file initial and annual reports through the online portal. FinCEN aims to make the reporting process as simple and straightforward as possible for companies.
Does this help clarify what you need to know about FinCEN Beneficial Ownership Reporting? Let me know if you have any other questions.
Conclusion
So there you have it, the lowdown on the new beneficial ownership reporting requirements coming your way. While it may seem like just another compliance headache, improving corporate transparency is an important step toward curbing illicit financial activity. The process itself is fairly straightforward, so take a deep breath and start gathering the necessary information now.
The deadline will be here before you know it, but by starting early you’ll ensure you have everything in order to file accurately and on time. Though change can be uncomfortable, keeping shady dealings out of our financial system is a goal we should all support. Do your part, file the reports, and together we can make progress toward a more ethical business landscape.
