If you’re a business owner, there’s a crucial update you need to be aware of. A new federal reporting requirement has been introduced, and ignoring it could lead to hefty penalties. This blog post aims to simplify the key points of this requirement, so you can ensure your business stays compliant.
Understanding the New Requirement
Starting January 1, over 32 million business owners must submit a Beneficial Ownership Information Report to the Financial Crimes Enforcement Network (FinCEN), a department of the U.S. Treasury. This requirement, stemming from the 2021 Corporate Transparency Act, is designed to combat money laundering and illicit fund concealment, particularly targeting shell companies and similar entities.
Who Needs to File?
The requirement applies to various business structures, including corporations, partnerships, and foreign companies doing business in the U.S. However, sole proprietorships are exempt. The report must detail beneficial owners — typically those holding at least a 25% stake in the company or exercising significant control, such as senior officers like the CEO or CFO.
Exemptions and Required Information
Interestingly, 23 types of businesses, like banks and large operating companies, are exempt due to existing disclosure practices. The report necessitates basic company details and personal information for each beneficial owner, including a valid identification document.
Filing Details
Existing businesses must file by January 1, 2025, while new entities have a 90-day window post-establishment. Filings are done electronically via FinCEN’s website, ensuring you receive a confirmation receipt.
Security Measures and Non-compliance Risks
Your data will be stored securely, accessible only to specific governmental and financial entities under stringent conditions. Non-compliance can result in daily fines, substantial penalties, and even imprisonment. The penalties are steep.
Seeking Assistance
Navigating this new requirement can be complex, so consider consulting with a certified professional like an accountant or attorney. Beware of unsolicited offers from firms claiming expertise in this area; rely on trusted professionals or referrals instead.
It’s crucial for business owners to stay informed and proactive about this new reporting requirement. Ensure your business complies by understanding the requirements, gathering necessary information, and filing promptly. Don’t hesitate to seek professional advice to navigate this process effectively.
Check out these essential resources on this new reporting requirement:
- Read the full list of requirements and and find out if your entity is exempt in FinCEN’s Small Entity Compliance Guide.
- Head to FinCEN’s website to file your report.
- Read FinCEN’s Beneficial Ownership Information FAQs.