Almost all small companies are required to file reports by the end of 2024 or pay huge fines. It’s called Beneficial Ownership Information Reporting, or BOIR
If you have anything to do with ownership or management of a Limited Liability Company or corporation, you need to read every word of this column. There are new reporting requirements, and the punishment for missing them is severe.
December 31, 2024 is the big day.
The Corporate Transparency Act requires almost all new and existing small corporations and limited liability companies to disclose information about their beneficial owners via beneficial ownership information reporting.
Every “reporting company” in the U.S. will be required to file these reports. A “reporting company” includes any corporation, limited liability company, or other similar entity created by filing a document with the secretary of state or similar office in any state or territory or with a federally recognized Indian Tribe, or formed under the laws of a foreign country and registered to do business in the United States
A beneficial owner is an individual who (1) exercises substantial control over a corporation or limited liability company, (2) owns 25% or more of the interest in a corporation or limited liability company, or (3) receives substantial economic benefits from the assets of a corporation or limited liability company.
Specifically, if certain entities apply to form a corporation or limited liability company, they must file beneficial ownership information with the Financial Crimes Enforcement Network (FinCEN), a Division of the U.S. Department of the Treasury.
This report is called “Beneficial Ownsership Information Reporting” or “BOIR.”
For any company formed on or after January 1, 2024, the report to FinCEN must be made within 30 calendar days after its formation.
The really scary part is, certain EXISTING corporations and limited liability companies ALSO must file this information with FinCEN. Any company formed before December 31, 2023 is required to report its beneficial ownership to FinCEN by January 1, 2025.
Every reporting company must provide each beneficial owner’s name, date of birth, residential or business address, and a unique identifying number from an acceptable identification document (such as a state driver’s license or passport).
This law imposes a civil penalty and authorizes criminal penalties—a fine, a prison term for up to three years, or both.
The final regulations have now been implemented.
In passing the Act, Congress stated that bad actors seek to conceal their ownership of business entities through the use of shell companies in order to facilitate illicit activities, including money laundering and the financing of terrorism.
It feels a little like they’re assuming your company is laundering money and the burden is on you to prove it’s not. I agree you shouldn’t have to do this, but you do.
If you have anything to do with the ownership or management of a Limited Liability Company or corporation, it’s time to be consulting with your attorney about what you will need to do to comply with this law.
Read more: https://www.fincen.gov/boi ; https://boiefiling.fincen.gov/fileboir
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