Beneficial Ownership Information – Jonathan Geever, CPA

Attention business owners: By now you have heard of a new filing requirement for your business called beneficial ownership information. Like most people, you might think, “Great! More hoops to jump through to operate my small business.” Below we will clarify exactly how this new regulation impacts your business.

Background

In 2021, Congress enacted the Corporate Transparency Act (CTA), which established the uniform BOI reporting requirements for certain entities. Beginning January 1, 2024, the federal Corporate Transparency Act (CTA) requires certain types of entities to file a beneficial ownership information report (BOIR) with the Financial Crimes Enforcement Network (FinCEN), a bureau of the United States Department of Treasury.

Purpose

The CTA is designed to help the U.S. government collect information necessary to prevent bad actors from using the U.S. financial system to facilitate money laundering, tax evasion, human and drug trafficking and other illicit activities.

Who Must File

Reporting companies include domestic or foreign corporations, limited liability companies, S Corporations, and any other entities created by the filing of a document with the secretary of state or similar office in the United States. There are several exemptions to this including publicly traded companies meeting specific requirements, nonprofit organizations, certain large operating companies, and others included in the list here: https://fincen.gov/boi-faqs#C_2.

What Information is Reported in the BOIR

The Company’s legal name, trade name, or trading names, the current address of its U.S. place of business, IRS taxpayer identification number (EIN) and information for each individual who is a beneficial owner are all required to be reported. A beneficial owner includes any individual who, directly or indirectly, either (1) exercises substantial control over a reporting company, or (2) owns or controls at least 25 percent of the ownership interests of a reporting company.

Timing

The effective date for the rule is January 1, 2024. Reporting companies created or registered before January 1, 2024 will have one year (until January 1, 2025) to file their initial BOI reports, while reporting companies created or registered after January 1, 2024, and before January 1, 2025, will have 90 calendar days after receiving notice of their creation or registration to file their initial BOI reports. Reporting created or registered after January 1, 2025, will have 30 calendar days after receiving notice of their creation or registration to file their initial BOI reports.

Noncompliance

The CTA announced civil penalties for willfully failing to comply with BOI reporting of $500 per day and criminal penalties of a $10,000 fine and/or up to two years imprisonment.

The clock is ticking, and you do not want to get caught scrambling to get this done at the last minute. Contact GCK Accounting, LLC and have our knowledgeable team support your business.

August 2, 2024

Jonathan Geever, CPA