New Federal Filing Requirements for Business Owners

Filing Requirements for Business Owners

We have important news to share regarding a new filing requirement that will impact the vast majority of small businesses in the United States starting in January of 2024.

In 2021, Congress, with bipartisan support, enacted the Corporate Transparency Act to address the problem of corruption, money laundering and other bad actors. By collecting this information and sharing it with law enforcement, financial institutions, and other authorized users, congress believes it will make things harder for bad actors to hide and benefit from ill-gotten gains. As a result, most small businesses will be required to file a Beneficial Ownership Information filing annually to the Treasury Department’s Financial Crimes Enforcement Network, commonly known as FinCEN.

Introducing the Beneficial Ownership Information (BOI) Filing: What You Need to Know

Starting January 1, 2024, a significant change is coming to the way businesses report their ownership details. The BOI filing will gather information about individuals who directly or indirectly own or control a company. This means that both new and existing businesses need to be aware of these new regulations.

Key Dates for Existing Businesses:

If your business is already up and running, an initial filing with FinCEN must be completed between January 1, 2024, and January 1, 2025. During this time, reporting companies will be asked to classify themselves as either domestic or foreign entities.

New Businesses Created After January 1, 2024:

For new businesses formed after January 1, 2024, there’s a requirement to file the BOI within 30 days of receiving actual or public notice that the creation of your business is effective. This step ensures that even newly established companies are in compliance with the new regulations.

Who Needs to File:

If your company is a corporation, LLC, or any other entity established through filing documents with a Secretary of State or similar office under state law or an Indian tribe, you’re required to submit a BOI report. However, certain exceptions apply, such as highly regulated industries and tax-exempt entities.

The Reporting Process:

The filing process involves completing a form with approximately 50 questions about your company’s ownership structure. Additionally, a state-issued ID (such as a driver’s license) or passport image is required for verification purposes.

Consequences of Non-Compliance:

Ensuring compliance is crucial, as failure to meet these new requirements can lead to serious consequences. You could face a civil fine of $500 per day for each day of violation, and there’s also the potential for criminal penalties of up to $10,000 and a maximum of two years in prison.

Frequently asked questions (FAQs):

FinCEN has published an FAQ on its website which can be accessed by following this link. https://www.fincen.gov/boi-faqs

We are here to help:

It’s estimated that around 32 million businesses will be impacted by these new regulations in 2024. We understand that this might sound overwhelming, but we’re here to assist you every step of the way.

Our office is looking into what resources we can have in place by January 1, 2024 to help our clients comply with this new filing requirement. As of today, we are still waiting for answers on how this will work and if we can file these on behalf of our clients.

If you have any questions or concerns about how these changes affect your business, please don’t hesitate to reach out to us. Our team is dedicated to helping you navigate these updates smoothly and effectively.

Thank you for your continued trust in our services. We’re here to serve you and ensure your business’s success.

Want More from Your CPA Firm?

Unhappy with your current CPA/tax professional? Looking for guidance and coaching to improve your business strategy? The first step is understanding your options, so you can take control of your finances and make better informed decisions that impact the future success of your company.

At MD LEWIS LLC, we will help you do just that.

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