New Federal Reporting Requirements for Small Business Owners
Big changes are ahead for small businesses in 2024. Under the Corporate Transparency Act, many businesses must now file a beneficial ownership information report (BOIR) with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).
What Is the BOIR?
The latest in small business news is the newly required beneficial ownership information report (BOIR). The BOIR is a report many businesses are now required to file under federal law. In completing a report on behalf of your company, you will disclose information regarding your company’s applicants and beneficial owners.
Applicants are the people who were responsible for the filing of the documents that formed your business. Beneficial owners are those who have substantial control over your company and/or own at least 25% of its interests. Your company's report is composed of information identifying these parties; their names and addresses as well as birth dates and identifying documents.
Where Did These New Requirements Come From?
The new federal reporting requirements for small business owners come from the Corporate Transparency Act, enacted by Congress in 2021. Under the Act, businesses across the country are now required to file a BOIR with FinCEN. The law aims to prevent financial crimes. Through these reports, businesses will increase their transparency. This will decrease people's ability to create shell companies that can be used for illegal activities like money laundering.
Do You Need to File a BOIR?
Probably. A very wide net has been cast in defining which companies are required to file. If based in the U.S., your company must file if it is a corporation, a limited liability company, or any other entity created by filing a document with a secretary of state or similar office. If your company was formed under the laws of a foreign country, it must file if it registered to do business in the United States by filing a document with a secretary of state or any similar office. There are exceptions; some companies are exempt and do not need to file a BOIR.
When Do You File?
If your company's formation date is before January 1, 2024, you have until January 1, 2025, to file your company’s BOIR. Companies formed in 2024 have 90 days from the LLC’s creation/registration date or the date of registration notice from the Secretary of State’s office, whichever is earlier. If you form your company in 2025 or later, you must file within 30 days instead of 90.
How Do You File?
To prepare and file your company’s BOIR go to FinCEN's website, then find and select “File BOIR.” You will both prepare and submit your report online with FinCEN. FinCEN’s website contains a host of information about the BOIR as well as answers to frequently asked questions about who needs to file, and how to file. There is no filing fee to file your company’s BOIR.
How to Update Your Report
It is your responsibility to maintain the accuracy of the information you report. This means that if any of the information you report changes, you are responsible for updating it. If a change occurs, you must file an updated report within 30 days from the day on which the change occurred.
Filing an updated report is simple. You follow the same steps that you did to complete your initial report, but this time around you will answer the first question differently. The first question you're asked in preparing your report is what type of filing you are preparing, here you have the option to select “Update prior report" instead of “Initial report.”
Don't put off preparing your BOIR. The filing process is free and simple, and you’ll feel better knowing that you’ve checked it off of your to-do list. Gather the information you need from FindLaw’s full article on BOIR preparation, sit down, and get it done.
- What Is the New Beneficial Ownership Information Report Requirement for LLCs and Corporations? (FindLaw's Learn About the Law)
- State Laws (FindLaw's Learn About the Law)
- Forming an LLC (FindLaw's Learn About the Law)
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