New Beneficial Ownership Reporting Requirements
US LLCs, C Corps, and other businesses will be required to fulfill new reporting requirements starting January 1st, 2024. This rule comes from FinCEN (Financial Crimes Enforcement Network) and was implemented based on Section 6403 of the Corporate Transparency Act.
In this article, we’ll explain how the beneficial ownership reporting rule works and what your obligations will be as a business owner. To support our clients, we’re offering beneficial ownership information report filing for all Autopilot customers — click here to learn more and to join Firstbase Autopilot.
Who Needs to Report?
First, let’s take a closer look at who these requirements apply to. According to FinCEN, these are the two main categories:
- Domestic Reporting Companies: “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: “Entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.”
Some businesses qualify for an exemption to the beneficial ownership reporting requirements. These include accounting firms, insurance companies, and banks and credit unions. Click here for more details.
What Is a Beneficial Owner?
FinCEN plans to use beneficial ownership information reports to generate more transparency with respect to ownership structures, taxation, and the flow of money both within and between businesses. They claim that the new requirement will help prevent money laundering, corruption, and other financial crimes.
The report will include information about beneficial owners. You will be considered a beneficial owner if you meet at least one of the following criteria:
- You own or control at least 25% of the company’s ownership interests
- You exercise substantial control over the company
What Counts as Substantial Control?
(2) is a little vague, but the phrase “substantial control” basically applies to all senior officers as well as anyone who has the power to appoint or remove those officers. These would likely include your CEO, COO, CTO, and other top executives.
There is also a provision for people who act as “important decision-makers” or have “any other form of substantial control.” If someone is responsible for decisions that have a significant impact on the company’s trajectory, they will most likely be considered a beneficial owner.
What Information Is Included?
The beneficial ownership information report will include details about all of your company’s beneficial owners. Make sure you have this information on hand for every owner:
- Full legal name
- Date of birth
- Street address (within or outside the US)
- Passport, driver’s license, or other unique identification
- Taxpayer Identification Number
Companies created or registered on or after January 1st, 2024 will also be required to report their company applicants — in other words, the person or people primarily responsible for submitting the company’s registration documents.
Note that certain entities and owners may be subject to additional requirements. For example, if your business involves registering other US business entities, you must provide the business address in addition to the personal addresses of the owners.
After submitting your report, FinCEN will issue a new identifier (FinCEN ID) that can be used to identify you in subsequent filings.
When Do I Need to File?
If your business was registered in 2023 or earlier, you need to file a beneficial ownership information report by January 1st, 2025.
On the other hand, businesses registered in 2024 will have just 90 days from the registration date. This grace period will drop to just 30 days starting in 2025.
There is no fee associated with beneficial ownership information reports, so you just need to submit the document.
What If I Miss the Deadline?
You could face significant consequences for non-compliance if you fail to submit your BOI report by the deadline.
According to FinCEN, willful violations may lead to fines of as much as $500 per day and $10,000 total. Criminal penalties could include prison sentences of up to two years.
How to File
You can submit your report directly to FinCEN, but automatic BOI filings are now available through Agent Autopilot. Simply upload the required information and let us handle the rest.
Don’t have Autopilot? Click here to learn more about the BOI filing and other Agent Autopilot features.
With so many tax and compliance filings already mandated for US businesses, you probably weren’t happy to hear about yet another reporting requirement. Fortunately, the beneficial ownership information report is a straightforward document with no additional fee.
Businesses incorporated in or before 2023 need to file by the start of 2025. There’s no reason to wait — we will be filing BOI reports for all Autopilot customers at no additional cost. Join Agent Autopilot today and get this requirement out of the way so you can focus on growing your business.