This is Part 3 of a 3-Part series (Part 1: It’s Time to Get Prepared & Part 2: FAQs) of information we are sending to our small business clients regarding the Corporate Transparency Act (CTA) and its impact on millions of small businesses. The CTA was passed by Congress a couple of years ago and the government has been ironing out the details since that time. Starting January 1, 2024, the Financial Crimes Enforcement Network (FinCEN), in an effort to track criminals and other bad actors who are laundering illicit funds through the United States using shell and front companies, will begin enforcement of a reporting requirement for small businesses. An overview of those reporting requirements was provided in our blog post and newsletter in September 2023.
As of today, the form required for filing beneficial ownership information for new and existing businesses is available on the FinCEN website at: https://www.fincen.gov/boi FinCEN has also provided a Guide for Small Businesses that details the compliance requirements more fully (https://www.fincen.gov/boi/small-entity-compliance-guide).
FinCEN answers some frequently asked questions which can be found at: https://www.fincen.gov/boi-faqs. In general, the answers are to questions about why there is a need to report, how to report, what to report, etc. It is probably easier to get through FAQs on their website than the Small Business Guide as there are charts and explanations of each part of the process. Who is a Beneficial Owner? What is a reporting company? Who is a Company Applicant? What does “substantial control” mean? And who should I talk to for more information?
New businesses formed as of January 1, 2024 and going forward will have 90 days from the date they file formation documents with their Secretary of State to file the initial BOI Report (Beneficial Ownership Report) with FinCEN. To access the BOIR Form, follow this link and click Prepare BOIR. It is suggested that either the Small Business Guide and/or the Frequently Asked Questions resources (both linked above) be used when filling out these forms as many of your questions will be answered by these guides. The three main sections to be completed are Reporting Company information, Beneficial Owner information and Company Applicant information. Each has multiple sections and the entire form has over 50 fields to be completed. It is a good idea to review the form and compile the information needed before trying to fill it out. Note that you can take your time preparing the form, save it, and then file later after all information has been confirmed (of course within the 90 days).
Companies that were formed prior to 2024 will have all of this year to file their BOI reports to FinCEN. The offices of Secretaries of State around the country should be notifying businesses of these reporting requirements. It is anticipated the notices will be provided at the time a company’s periodic or annual report is due to the Secretary of State. Reporting for companies formed prior to 2024 will only have to report information for the Reporting Company and the Beneficial Owner(s), not the Company Applicant.
There are other regulations and rules regarding changes to ownership in a company which will require reporting to FinCEN within 30 days of a change in ownership, change in business address, etc. These regulations and rules will be discussed in future newsletters and postings, but you can certainly look at the Small Business Guide if you would like more information immediately.
The Beneficial Ownership Reporting requirements are important to maintain regulatory compliance for your business, so please feel free to give us a call if you have immediate questions or concerns.
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