We want to inform you about new reporting obligations that took effect on January 1, 2024, which may require your business to disclose its beneficial ownership information (BOI) to the federal government.
Starting January 1, 2024, many U.S. companies will be required to provide details about their beneficial owners (the individuals who ultimately own or control the company) and company applicants (the person(s) who directly file or are primarily responsible for the creation or registration of the company). This information must be reported to the Financial Crimes Enforcement Network (FinCEN), which is part of the U.S. Department of the Treasury.
Important Note: This filing is free and can be done by the reporting companies themselves. Be cautious of official-looking correspondence from third parties offering to submit beneficial ownership reports for a fee.
Do I Need to Report?
Most businesses affected are small businesses that may need to submit this information. Your company must report beneficial ownership details if it is:
A corporation, limited liability company (LLC), or any entity created in the U.S. by filing a document with a secretary of state or similar office under state or tribal law; or
A foreign company registered to do business in any U.S. state or tribal jurisdiction through such a filing.
Certain entities are exempt from these reporting requirements. You can find a list of exempt entities in the BOI Small Entity Compliance Guide. Exemptions depend on the type of business, size, and whether the entity is inactive.
How Do I Report?
Companies required to report must submit beneficial ownership information electronically through FinCEN’s website: fincen.gov/boi.
When Must I Report?
Reporting began on January 1, 2024.
Companies created or registered before January 1, 2024, have until January 1, 2025, to report BOI.
Companies created or registered on or after January 1, 2024, and before January 1, 2025, must report BOI within 90 days of their creation or registration notice.
Companies registered on or after January 1, 2025, must report BOI within 30 days of receiving notice of their creation or registration.
If there are any changes to the required information about your company or its beneficial owners, an updated BOI report must be filed within 30 days of when the change occurred. The same time frame applies to any changes made by an individual to obtain a FinCEN identifier (a unique ID for FinCEN reporting). A company is not required to file updates for changes to previously reported personal details about a company applicant.
Significant penalties apply for failing to meet filing deadlines, which may include criminal (fines and/or imprisonment) or civil (monetary) penalties. The penalty for willfully failing to file initial or updated reports on time is $500 per day, up to a maximum of $10,000, and potential imprisonment for up to two years.
It is your sole responsibility to comply with the Corporate Transparency Act (CTA), including the BOI reporting requirements. More information is available at fincen.gov/boi. We recommend consulting with legal counsel for any questions or concerns about how BOI reporting affects your business.
In closing, this post was created to make you aware of these new reporting obligations, the associated risks, and to encourage you to contact legal counsel for assistance with CTA compliance and related BOI filings for entities you own or control.
Sources
Financial Crimes Enforcement Network (FinCEN). "What Companies Will Be Required to Report." Retrieved from fincen.gov/boi-faqs#c_1
U.S. Department of the Treasury. "U.S. Beneficial Ownership Information Registry Now Accepting Reports." Retrieved from home.treasury.gov
Lexology. "What is the Penalty for Noncompliance with the Corporate Transparency Act." Retrieved from lexology.com
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