Beneficial Ownership information
In 2021, Congress passed the Corporate Transparency Act. This bipartisan law creates new requirements for how some companies will need to report beneficial ownership information. Beneficial ownership information (BOI) pertains to information about individuals who directly or indirectly control or own a company. This essential law has been put into place to curtail bad actors who attempt to benefit from illegal gains through shell companies or shady dealings under the guise of structure ownership.
You may be wondering if your company will be required to participate. Here is a breakdown on which companies will need to report (aka. reporting companies):
- American corporations, limited liability companies, or any other entities created by the filing of a document with a secretary of state or any similar office in the U.S.
- Foreign companies (including corporations and limited liability companies) registered to do business in the United States but was formed under a foreign country law and have filed with a secretary of state or any similar office in the U.S.
Sole proprietorships are typically not reporting companies unless they have filed under the secretary of state or similar offices in their state. In addition, there are 23 types of entities that are exempt from these reporting requirements. Most are financial institutions, large (high earning) companies, governmental establishments, and public utility companies.
FinCEN (Financial Crime Enforcement Network) will begin accepting beneficial ownership information reports on January 1, 2024. If you determine that your company qualifies as a “reporting company” and your company was created prior to January 1, 2024, then you will have until January 1, 2025 to file your initial beneficial ownership information report. If your company was formed after January 1, 2024,and before January 1, 2025, you will have 90 calendar days to file your initial BOI report. Companies registered on or after January 1, 2025, will have 30 calendar days to file their initial BOI reports with FinCEN. You must report electronically through a secure filing system made available via FinCEN’s BOI E-Filing website (https://boiefiling.fincen.gov). Penalties apply to those who fail to meet these deadlines.
You likely have many more questions about this important new legislation. Founder/CEO Lakeesha Browne, CPA can professionally answer your questions. You may also book a consultation with her for this concern or any other accounting needs.
Work Cited:
“Beneficial Ownership Information Reporting”. Fincen.gov. 12 Dec. 2023. https://www.fincen.gov/boi-faqs#K_1. Accessed 6 January 2023.
