Welp, the government has gone and done it again. In an effort to crack down on money laundering, financing terrorism, tax fraud, and other illegal acts via sketchy shell companies, Congress has enacted the Corporate Transparency Act. If you’re a small business owner, you and about 32 million other business entities have a part to play in fighting the bad guys.
Reporting requirements kicked off in January 2024, and there are some pretty steep fines for non-compliance ($500/day up to $10,000 and 2 years in jail). Before you start wondering how an orange jumpsuit goes with your coloring, there is some good news: It’s not that hard to comply. Here’s what you need to know.
Who’s in charge of Beneficial Ownership Information Reporting?
FinCEN, part of the U.S. Treasury, is running this play. It’s not about taxes per se, but rather about stopping bad people from doing bad things while hiding behind shell companies.
Who has to file a Beneficial Ownership Information Report?
The Corporate Transparency Act requires nearly all newly-formed and existing companies to file a report starting on Jan. 1, 2024. This includes LLCs, Corporations, and other entities that are created by filing relevant documents with your secretary of state. Any foreign companies that are registered to do business in the U.S. are also required to report.
What are the deadlines for filing a BOI Report?
BOI reporting kicked off Jan. 1, 2024. Existing businesses that were an entity prior to that date have a full year, until Jan. 1, 2025, to complete their reports. (That said, it’s super-simple and we recommend getting it done and checked off your list).
New businesses that are formed on or after Jan. 1, 2024, must report within 90 days of creating their entity.
Happily, this isn’t an annual requirement. You only have to do it once unless you need to update or correct information such as adding or dropping a shareholder, changing addresses, etc., in which case you must make the update within 30 days of the change.
Or, if you were previously exempt and now aren’t, you need to get filing too.
What information is collected in BOI reporting?
Each reporting company must provide the following information about each beneficial owner (someone who substantially controls and/or owns 25% or more of the company):
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