New FinCEN Rule for Small Business Owners
Congress passed the Corporate Transparency Act in 2021. It is enforced by “FinCEN” – Financial Crimes Enforcement Network. The act mandates small businesses, including LLCs and corporations, to report identifying information on their “beneficial owners”. Corporations, LLCs, and companies that filed a document with the secretary of state are all required to report Beneficial Ownership Information. The deadline for pre-existing companies to file the initial report is January 1, 2025. Newer companies formed in 2024 file within 90 days of their formation. 23 company types are exempt from BOI reporting and you can find that full list on FinCEN’s website.
Who is a beneficial owner?
FinCEN defines a beneficial owner as “an individual who either directly or indirectly: (1) exercises substantial control over the reporting company, or (2) owns or controls at least 25% of the reporting company’s ownership interests”. Direct and indirect beneficial owners are covered. Companies formed post-January 1, 2024, include “company applicants” in their BOI reporting.
Action Steps:
- Small business owners should initiate the process of gathering information and filing to comply with the CTA’s BOI reporting requirements. You can file the BOI report through FinCEN’s website. Timely action is crucial to avoid penalties and ensure compliance with the new law.
- Have more questions? Read these FAQs on FinCEN’s website.
Casey Smith
President, Wiser Wealth Management
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