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Business Owners: It’s Time to File Your Beneficial Ownership Information Report

Jun 28, 2024

If you own a business or plan to start one, you need to know about a new U.S. Department of Treasury reporting requirement. Effective January 1, 2024, the Corporate Transparency Act of 2020 mandates that most businesses report key information about their owners and executives to the Treasury. This new rule aims to combat financial crimes, money laundering, tax fraud, and terrorism financing.

Who Must Report and What Must They Report?

The reporting requirement applies to limited liability companies (LLCs), corporations, and any other entities created by filing a document with a U.S. secretary of state or similar office.

Businesses must provide certain basic information about each of their “beneficial owners” to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). Beneficial owners are individuals who:

  1. Exercise substantial control over the company, or
  2. Own or control at least 25% of the company’s ownership interest.

“Substantial control” includes senior officers (e.g., president, CEO, CFO, general counsel, COO), individuals with authority to appoint or remove officers or a majority of the company’s directors, key decision-makers, and others with substantial control.

Businesses must report the following information about each beneficial owner to FinCEN:

  • Name
  • Date of birth
  • Address
  • Identifying number and issuer (e.g., U.S. driver’s license number or passport number), including a scanned copy of the identification document

Additionally, companies must provide basic information about themselves, such as their name, address, and EIN. Companies formed on or after January 1, 2024 must also provide information about “company applicants”—those who helped form the company.

When is the Reporting Deadline?

  • Existing companies formed before January 1, 2024, must file their beneficial ownership information report by January 1, 2025.
  • New companies formed on or after January 1, 2024, have 90 days to report after their registration is effective.
  • Companies formed on or after January 1, 2025, will have 30 days to report.

Ongoing Reporting Requirements

If any reported information changes, companies must file an updated report within 30 days of the change. Examples of changes requiring an update include changes in a beneficial owner’s address or name, a new CEO or owner, or a change in the company’s name. Other than the initial filing and required updates, there are no ongoing reporting requirements.

Penalties for Non-Compliance

Willful violations of the reporting requirement can result in civil penalties of $500 per day. Additionally, criminal penalties can include up to two years of imprisonment and fines up to $10,000. However, FinCEN allows companies to correct any mistakes or omissions within 90 days of the original report deadline.

How to File and Find More Information

Beneficial ownership reports can be filed on FinCEN’s secure portal here. For more details, check out FinCEN’s extensive list of FAQs here.

Need Help? Contact Us!

If you have questions about the beneficial ownership information reporting process or need assistance filing your report, contact us! We have already helped many clients with their beneficial ownership information reports.

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