Beneficial Ownership Registration of all Small Businesses Now Required
Beginning January 1, 2024, almost all small businesses in the United States are required to report all owners of the business to the Financial Crimes Enforcement Network (FinCEN). This new requirement is part of a law enacted by Congress in 2021 called the Corporate Transparency Act. It affects LLCs, S corps, partnerships, and small corporations. The purpose of the report is to identify business owners/shareholders/members who own at least 25% of the business. The reporting requires name, address, and social security number or other identifying information. Also, a copy of the owner’s driver’s license or passport must be uploaded. The documents must be current and not expired. Companies that are formed on or after January 1, 2024, will also have to identify the company applicant as well as the owner. The company applicant is the person responsible for the formation of the company.
BOI reports must be filed electronically on FinCEN’s secure filing system. The website for filing and more information is available at www.fincen.gov/boi.
The report is not annual, it is once only. Then if ownership changes, the report will have to be updated. The initial due date for companies that already exist as of January 1, 2024, is January 1, 2025. Companies that are formed in 2024, have to report within 90 days of formation of the company. If your company is created or registered on or after January 1, 2025, it will have 30 calendar days from formation to file its initial BOI report.
Non-compliance with this registration requirement could result in civil penalties of $500 per day of non-compliance, criminal penalties including imprisonment for up to two years, and/or a fine of up to $10,000. Non-compliance can also include providing false identifying information.
Some entities are exempt from this requirement. For example, investment companies, banks, financial institutions, and large operating companies. The completed exempt listing is on the FinCEN website.
If you need assistance in completing this registration, contact your accounting firm. They have the expertise and knowledge to help you out.
ELLEN ROSE
Ellen Rose is a CPA with over 26 years of tax, accounting, and business experience. She is a knowledgeable, client-focused accountant who makes sure her clients get the best possible service and attention. Her accounting practice focuses on the needs of small businesses and start-ups. She is especially passionate about helping entrepreneurs succeed and thrive in today’s very competitive and challenging business climate. Sternbach & Rose, CPAs – Where you’re never just a number.
