Navigating the complexities of business ownership can be challenging, especially when new regulations come into play. One such recent development is the introduction of new federal reporting requirements by the Financial Crimes Enforcement Network (FinCEN). This article aims to break down these new requirements, making them easily digestible for you, the small business owner.
What is the New Beneficial Ownership Information Reporting Requirement?
The new regulation requires businesses to report beneficial ownership information (BOI) to FinCEN, a bureau within the U.S. Department of Treasury. This move aims to enhance transparency in business operations and ownership. Read Introduction to Beneficial Ownership Information Reporting
Do I Need to Report?
Most small businesses fall under this requirement. You need to report if your business is:
- A corporation, a limited liability company (LLC), or similar, created in the U.S. by filing with a secretary of state or similar office.
- A foreign company registered to do business in any U.S. state or Indian tribe.
However, there are 23 types of entities exempt from this requirement. FinCEN’s Small Entity Compliance Guide provides checklists to determine if you qualify for an exemption.
How Do I Report?
You can report BOI electronically through FinCEN’s BOI E-Filing System at boiefiling.fincen.gov
When Do I Report?
- Existing Businesses (before 1/1/2024): You have until January 1, 2025, to report.
- New Businesses (from 1/1/2024 onwards): Report within 90 days of creation or registration. Note that in 2025, this window will be reduced to 30 days.
- Updates/Corrections: Submit within 30 days of the change.
Beware of Scams!
It’s crucial to be vigilant. This filing is free and should be done directly on the FinCEN website. Be wary of third-party companies offering to file on your behalf for a fee. For more information on mail solicitations, visit www.sos.state.mn.us
What If I Have Questions?
Advice From EFund Business Advising Team
- Use Trusted Advisors: For guidance, rely on your accountant, attorney, or business consultant.
- Timing: A good time for existing businesses to file is during tax time with your accountant’s assistance.
- New Businesses: Be aware of the shorter 90-day window for reporting.
- Regular Updates: Stay alert to any changes in ownership information and report promptly.
- Educate Yourself: Spend some time on the FinCEN website to understand the process and requirements fully.
Remember, staying informed and proactive about these new requirements is key for the smooth operation of your business. By understanding and adhering to these regulations, you not only comply with the law but also contribute to a more transparent and trustworthy business environment.