New government regulations for 2024 require certain businesses to report their beneficial owners. This change aims to increase transparency and prevent illegal activities like money laundering and tax evasion. For business owners, understanding and complying with these requirements is critical to avoid penalties and stay on the right side of the law.
This report filing takes only 10-15 minutes to complete online and there is no filing fee. It is estimated that 32 million small businesses will be required to file a report.
What is Beneficial Ownership?
Beneficial ownership refers to individuals who hold significant control over a company or own a substantial interest in it. This includes anyone who:
- Directly or indirectly owns a certain percentage (often 25% or more) of the company's shares,
- Has significant influence over the company’s decisions,
- Holds executive roles, or
- Benefits from the business’s financial performance.
The new filing requirements make it mandatory for affected businesses to identify and disclose these beneficial owners, ensuring that ownership structures are clear to regulatory authorities.
Who Needs to File and When?
The new regulations impact state registered companies such as an S corporation, C corporation, limited liability company (LLC), limited partnership (LP). Generally, these businesses must file a Beneficial Ownership Information (BOI) report with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
- Initial Filing Deadline: The deadline to file the initial beneficial ownership report is 12/31/2024 for entities started before 2024 and within 90 calendar days for any new entity created in 2024. Starting in 2025, new companies will have only 30 calendar days to file the report.
- Ongoing Reporting Requirements: Going forward, companies must report any changes in ownership within 30 calendar days of the change.
- Exemptions: Sole proprietors (filing Schedule C) and large companies with at least 20 full-time employees and at least $5 million in gross collections are exempt from filing the BOI report. However, the report requirement does apply to a Single Member LLC even if it is taxed as a sole proprietor.
For more detailed information regarding the official filing guidelines and specific instructions from FinCEN. https://www.fincen.gov/boi
Steps to Meet the Filing Requirements
- Identify Beneficial Owners: Determine which individuals meet the beneficial ownership criteria within your company.
- Gather Required Information: Collect necessary information for each beneficial owner, typically including name, date of birth, address, and a unique identifying number (such as a driver’s license or passport number).
- Submit the Filing: Submit this information via the official filing portal.
- Maintain Accurate Records: Keep copies of your submissions and update your records as necessary. This will make it simpler to report any changes promptly.
Consequences of Non-Compliance
Meeting beneficial ownership filing requirements is essential for business owners to maintain legal standing and demonstrate transparency. While initial reporting only takes 10-15 minutes, failure to file the report by the deadline can result in penalties of up to $591 per day as well as criminal penalties of up to $10,000 and two years in prison.
If you have further questions about this filing, don’t hesitate to reach out to us or your tax preparer. The 12/31 deadline is fast approaching.
If you would like to discuss or learn more, schedule a call or meeting with me using the link below:
Tripp Yates, CPA/PFS, CFP®
901.413.8659 tripp@eaglestrong.com
Tripp’s passion for financial planning is evident to each and every client he meets with. His desire is to help his clients organize their finances, reduce taxes, and invest wisely. As a fee-only fiduciary advisor, Tripp strives to work in a humble and transparent way.
With extensive experience in financial planning and investment management, Tripp diligently uses his credentials of CPA and CFP® to benefit his clients. Over the last ten years, he has managed over $100 million in assets for individuals and families. In 2017, he founded Eaglestrong Financial, specializing in helping dentists and business owners. Outside of work, Tripp enjoys running, spending time with his family, and cheering on his favorite sports teams. He is a member of Harvest Church.
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Disclaimer
Eaglestrong Financial, LLC is a Registered Investment Advisor offering advisory services in the states of TN and MS and in other jurisdictions where exempted. The information contained herein is not intended to be used as a guide to investing or tax advice. This material presented is provided for educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. Past performance is no guarantee of future results.
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