As part of the Corporate Transparency Act, enacted in 2021, certain businesses are now required to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of Treasury.
Starting January 1, 2024, new businesses founded on or after January 1, 2024, and before January 1, 2025, will have 90 days to submit this information, those founded on or after January 1, 2025, will have 30 days. Businesses established before that January 1, 2024 date will have until January 1, 2025 to file. Penalties for willfully violating these reporting requirements can be steep. They can include civil penalties of up to $500 a day until the information is filed, a criminal fine of $10,000, or a two-year prison sentence.
Needless to say, it’s incredibly important that business owners understand and abide by these regulations. We’ve gathered some answers to frequently asked questions here, along with some additional resources with more in-depth information.
What is a beneficial owner?
Beneficial owners are individuals or trusts that directly or indirectly own 25% or more of the Reporting Company or exercise substantial control and play a significant role in the management of the company.
What information will I be required to submit?
Beneficial ownership information includes full legal names, birthdates, addresses, unique identifying numbers, and identification document images.
How do I know if my company has to submit this information?
Corporations and limited liability companies are required to file a report unless they meet certain exemption criteria. There are 23 exemptions, including large operating companies, public companies, and highly regulated entities like banks and insurance companies. Specific exemptions and more details are listed on pages 4-14 of the FinCEN Small Entity Compliance Guide located here.
What if my information changes?
Companies must file updated reports within 30 days if any beneficial ownership information changes and have 30 days to file corrected reports if any errors or inaccurate information were previously filed.
Will any of these rules change?
Quite possibly. The filing deadline for new businesses was recently extended from 30 to 90 days after their creation and other changes may come. There is also a bill currently moving through Congress that could delay or alter the filing date for established businesses. We anticipate there may be future updates and clarifications to the regulation. The latest news on beneficial owner reporting will be published on FinCEN’s newsroom page.
Additional Resources from FinCEN:
- Beneficial Ownership Information Reporting Overview Page
- Frequently Asked Questions (FAQs)
- Small Entity Compliance Guide
If you are in need of additional information or resources, send us a message at accounting@simafg.com.
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