Beginning on January 1, 2024, many businesses will be required to file beneficial ownership information (BOI) reports to the U.S. Department of the Treasury Financial Crimes Enforcement Network (FinCEN). New requirements are due to the passing of the Corporate Transparency Act – a measure to prevent further financial crimes in the country.
What companies fall under the new beneficial ownership information reporting requirement?
According to FinCEN, you may need to report information if your company is:
- A corporation, a limited liability company (LLC), or was otherwise created in the United States by filing a document with a secretary of state or any similar office under the law of a state or Indian tribe ; or
- A foreign company and was registered to do business in any U.S. state or Indian tribe by such a filing.
There are 23 entity type exemptions from the requirement including certain publicly traded companies, nonprofits, and large operating companies. A full list can be found on the FinCEN FAQ page.
What is a “Beneficial Owner” under the Corporate Transparency Act?
A “Beneficial Owner” is defined as an individual who ultimately owns or controls the company. This person has “substantial control” in the company or owns or controls at least 25% of the ownership interests.
What information will need to be reported to FinCEN under the new beneficial ownership information reporting requirement?
- Company information: including legal name, any trade names, the current street address of principal place of business if in the USA (or the current address from which the company conducts business in the USA), jurisdiction of formation or registration, and Taxpayer Identification Number (or, a tax identification number issued by a foreign jurisdiction and the name of the jurisdiction).
- Beneficial Owner information: individual’s name, date of birth, residential address, and an identification number, issuing jurisdiction, and image of a current passport, U.S. driver’s license, or other accepted form of identification.
Although businesses in existence prior to January 1, 2024, have a full calendar year to file initial reports to FinCEN, noncompliance with the new law could mean civil and criminal penalties so it’s best to get an early start. Entities created on or after January 1, 2024 (but before January 1, 2025) will have 90 calendar days to file their initial BOI reports from the date they receive official notice that their company creation is effective. Entities created on or after January 1, 2025 will have 30 calendar days to file their initial BOI reports from the date they receive official notice that their company creation is effective.
To find more information about the new requirement and whether your business qualifies for an exemption, check the FinCEN website or contact your attorney. The FinCEN website is also where companies will report information, if required.