Background: Congress enacted the Corporate Transparency Act in 2021 to combat illicit finance. Beginning in 2024, the law requires that many small businesses operating in the U.S. will need to report information about their owners to the Financial Crimes Enforcement Network (commonly referred to as FinCEN), a bureau of the U.S. Department of the Treasury that collects and analyzes information to help fight financial crimes.
First, determine if your business must comply with the new reporting rules. Any company created in the United States that has registered with a secretary of state or any similar office under the laws of a state or Indian tribe, or foreign companies registered to do business in the U.S., must comply with these new reporting requirements.
Many small businesses that are C corporations, S corporations, partnerships, or LLCs (including single-member LLCs) must comply. There are, however, nearly two dozen types of businesses that are exempt from these new reporting requirements, including sole proprietors, accounting firms, insurance companies, banks, certain large businesses, and tax-exempt entities. Click here to review the list of exempt entities.
Know when you MUST report. The reporting deadline varies depending on when your business was created or registered:
- Created before January 1, 2024. For existing companies that were created before January 1, 2024, you must file your FinCEN report, commonly referred to as a Beneficial Ownership Information (BOI) report, sometime this year (before January 1, 2025).
- Created during 2024. Companies formed this year have 90 days to file their FinCEN BOI report after they are created or registered.
- Created in 2025 and beyond. The BOI report must be filed within 30 days of being registered or legally created.
Immediately report any changes. After your initial BOI report is filed, an updated BOI report must be filed within 30 days following any change in information previously filed with FinCEN. Any inaccuracies discovered on previously-filed reports must also be reported within 30 days.
There are penalties for noncompliance. You may be liable for up to $5,000 or more in fines for each defined violation for non-compliance or false information provided on the form. There are also daily fines for potential errors and omissions.
Where to register and learn more. When filing, be prepared to not only identify owners and beneficial owners of your business, but also be prepared to submit visual proof of each owner’s identity (i.e. Driver’s license, passport, etc.) Click here to learn more: www.fincen.gov/boi
Beware of scams. According to FinCEN, BOI filings are being exploited by scammers. Per FinCEN: FinCEN has been notified of recent fraudulent attempts to solicit information from individuals and entities who may be subject to reporting requirements under the Corporate Transparency Act. The fraudulent correspondence may be titled “Important Compliance Notice” and asks the recipient to click on a URL or to scan a QR code. Those e-mails or letters are fraudulent. FinCEN does not send unsolicited requests. Please do not respond to these fraudulent messages, or click on any links or scan any QR codes within them.