Important Update: New Beneficial Ownership Reporting Requirements Starting January 1, 2024
At Capata, we want to ensure you’re informed about a significant regulatory change that could impact your business. Effective January 1, 2024, the Federal Corporate Transparency Act (CTA) will require many U.S. businesses to report Beneficial Ownership Information (BOI) to the Financial Crimes Enforcement Network (FinCEN), a bureau under the U.S. Treasury Department.
Understanding the Corporate Transparency Act (CTA)
The CTA mandates that most U.S. businesses, including small entities such as corporations, LLCs, limited partnerships, and others, must file BOI reports with FinCEN. This initiative aims to enhance transparency and combat illicit activities such as money laundering and fraud.
Who is a Beneficial Owner?
A “Beneficial Owner” is defined as an individual who has substantial control over the business or owns/controls at least 25% of it, even if they are not a direct owner. Businesses are required to report any changes to this information within thirty (30) days of the change.
Information Required
Businesses subject to the CTA must review and potentially update their compliance procedures to ensure accurate and timely reporting. The required information includes:
- Legal and trade names of the business
- Business address
- Jurisdiction of formation or registration
- Taxpayer Identification Number (TIN)
All BOI Reports must be filed online according to the following timelines:
- Existing companies created or registered before January 1, 2024, must file by January 1, 2025.
- New companies formed after January 1, 2024, must file within 30 calendar days after receiving their filed Articles from the secretary of state or equivalent office.
For each Beneficial Owner (and each Company Applicant for businesses created or registered after January 1, 2024), businesses must provide:
- Legal name
- Birthdate
- Home address
- An identifying number from an approved document (driver’s license, passport, etc.)
- An image of the document containing the identifying number
Legal and Compliance Guidance
Non-compliance with the CTA can result in severe penalties, including civil fines of up to $500 per day, criminal fines up to $10,000, and imprisonment for up to two years. Due to the complexities of these requirements, we strongly recommend seeking advice from legal professionals or utilizing services like Paychex to ensure compliance.
For more detailed information on the Beneficial Owners Information requirement, please refer to the BOI Informational Brochure (fincen.gov).
Stay Informed and Compliant with Capata – Your Partner for Business Success in 2024 and Beyond.
