Starting in 2024, a regulatory update will impact nearly all small businesses. The Corporate Transparency Act (CTA), enacted as part of the National Defense Act for Fiscal Year 2021, mandates that millions of entities report their beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN). This is not a tax filing requirement but an informational filing requirement for most businesses.
The uniform BOI reporting requirements for certain corporations, limited liability companies, and other similar entities created or registered to do business in the U.S. have been implemented and will go into effect on 1/1/24. At that time, FinCEN will have an online website to register your entities, but this website is currently under construction.
The following link to FinCEN contains FAQs regarding who is required to report their ownership information.
Companies required to report are called reporting companies. There are two types of reporting companies:
- Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
- Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that has registered to do business in the United States by filing a document with a secretary of state or any similar office.
This includes any entities created in the past but have never “officially” started a business or if you have not dissolved the entity with the secretary of state or similar office. For most of our clients, this will apply to LLCs set up for rental properties, holding companies for investments, or any other entities organized.
For existing entities created before 1/1/2024, the reporting will be due by 1/1/2025; for new entities created after 1/1/2024, the reporting will be due within 90 days of the creation date.
You are responsible for your compliance with the BOI reporting requirements and collecting relevant ownership information. Our firm will NOT be providing these services and, therefore, suggest contacting your legal advisors with questions regarding the applicability of the CTA’s reporting requirements and issues surrounding the collection of relevant ownership information.
