New Reporting Rules for Businesses

In January 2021, the Corporate Transparency Act was signed into law to help prevent and combat money laundering, terrorist financing, corruption, tax fraud, and other illicit activity. As a result, businesses are now required to become more transparent about their ownership structures.

Starting January 1, 2024, most business entities created in or registered to do business in the United States will be required to report information about their beneficial owners — the individuals who ultimately own or control a company — to the Financial Crimes Enforcement Network (“FinCEN”).

A business entity is defined as a corporation, a limited liability company (LLC), or a business entity otherwise created by filing a document with a secretary of state or similar office. Non-LLC sole proprietorships are excluded from this definition.

The reporting procedure goes into effect on January 1, 2024. The due date for the initial report depends on when the entity was created:

If your company is created on or after January 1, 2024, then the initial report is due within 30 calendar days of the date the business is created.

If the company was formed before January 1, 2024, then the initial report is due no later than January 1, 2025.

In other words, effective January 1, 2024, new entities will have to file a report within 30 days of their creation. Entities already in existence on January 1, 2024, have until January 1, 2025, to file.

Note: As of October 2023, FinCEN is proposing to amend its final BOI Reporting Rule to provide 90 days for reporting companies created or registered in 2024 to file their initial reports, instead of 30 days. The proposed rule would not make any other changes to the final BOI Reporting Rule.

Reports include information about (1) the reporting company, (2) the reporting company’s beneficial owners, and (3) “company applicants” who made the filings to create the entity. A beneficial owner is any individual who, directly or indirectly, either exercises substantial control over the company or owns or controls at least 25% of the company’s ownership interests.

You can find more information and start your filing process at FinCEN’s website: https://boiefiling.fincen.gov/