As of January 1, 2024, a new set of regulations from the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has taken effect, impacting many small businesses across the country. These rules, known as the “beneficial ownership information (BOI)” reporting requirements, aim to increase transparency around ownership structures and combat financial crime.
Who Needs to Report?
Not all small businesses are subject to these new regulations. The BOI reporting requirements primarily apply to:
- Corporations: This includes traditional C corporations, S corporations, and limited liability companies (LLCs) organized or registered to do business in the United States.
- Limited liability partnerships (LLPs): Certain LLPs, particularly those involved in financial activities or with professional licenses, may need to report.
- Trusts: Trusts with assets exceeding $1 million must report information about their settlor, trustee(s), and beneficiaries.
What Information Needs to be Reported?
For each beneficial owner, defined as an individual with significant control over the entity, businesses must report:
- Name: Full legal name
- Date of birth: Month and year
- Address: Residential address
- Identification: Identifying number and issuer from a U.S. driver’s license, passport, or other government-issued ID
Additionally, companies formed or registered after January 1, 2024, must report information about the individuals who formed the company (“company applicants”).
How to Report?
Reports can be filed electronically through FinCEN’s secure online portal. The filing process is relatively straightforward, but it’s crucial to ensure accuracy and completeness to avoid potential penalties.
Resources for Small Businesses:
FinCEN recognizes the potential burden this new rule may place on small businesses. They offer various resources to help businesses comply, including:
Key Takeaways:
While the BOI reporting requirements may seem complex at first, understanding the basics and utilizing available resources can help small businesses navigate the process smoothly.
Remember:
Identify if your business is required to report. Not all small businesses are subject to the rule. Gather the necessary information about beneficial owners. This includes names, dates of birth, addresses, and identification numbers. File reports electronically through FinCEN’s online portal. Utilize available resources for assistance. FinCEN offers various tools and support to help businesses comply. By staying informed and taking proactive steps, small businesses can ensure compliance with these new regulations and contribute to a more transparent financial system.
