Starting this year, most companies in the United States will have to report who their beneficial owners are (aka, the people who ultimately own or control the company) to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
In an effort to curb money laundering and the funding of terrorist activities, Congress passed the Corporate Transparency Act in 2019. It went into effect in 2021 and established a timeline for the new reporting requirements, which brings us to today. The necessary forms for filing this information with the federal government just became available on January 1, 2024.
Luckily, it only takes a few minutes to complete and it’s free. But filing paperwork, no matter how quick, with the federal government can be intimidating. Not sure where to start? Here’s your guide to filing the beneficial ownership report.
How do I know if I have to file?
The federal government refers to the businesses that are required to file this paperwork as “reporting companies''. Your business is likely a reporting company if it's a corporation, an LLC, or you otherwise established it by filing with a secretary of state. Even foreign businesses that operate in any U.S. state are subject to the filing requirements.
There are 23 types of business entities that are exempt from the reporting requirement. These include publicly traded companies, nonprofits, and “certain large operating companies,” according to FinCEN’s introduction to the Beneficial Ownership Information (BOI) guidance.
In the process, FinCEN did something cool for small businesses. It created a Small Entity Compliance Guide specifically designed to help small businesses navigate the new requirement. Check it out: It’s available in English, Spanish, two forms of Chinese, and eight other languages.
When do I need to file my beneficial ownership information?
The forms to file became available on FinCEN’s website on the first of the year. Any company that was established prior to January 1, 2024 has until January 1, 2025 to file their BOI paperwork.
Companies that come into being on or after the first day of 2024 have 90 calendar days after notification from a secretary of state or similar office that their business is active to file the paperwork. Once 2025 hits, though, new companies will have just 30 calendar days to file.
Who can file the BOI paperwork for my company?
Anyone who is authorized to act on behalf of your company can file the paperwork. This could be you, another owner, an employee, or a third-party service provider. It’s important to note that the paperwork does ask for basic contact information for the person submitting the form, including their name and email address. It’s a good idea to make sure that the person filling out this form will be available to be contacted should there be any questions about your business’s filing.
How do I file the BOI paperwork?
FinCEN created an e-filing system for submitting the paperwork. Sorry old fashioned folks, filing by paper doesn’t seem to be an option. Luckily, the e-filing system is quick and easy to use.
There are two options for e-filing: Using an online form directly or filling out and uploading a pdf. Besides the pdf option requiring Adobe Reader, which option you choose is really about preference. Overall, it should take well under a half hour to file and all of the information the forms ask for (like your business’s legal name, its employer or tax identification number, and the like) is all pretty straightforward.
Will I need to update my business’s BOI filing?
If the ownership information of your company changes, you’ll have to update your BOI filing when it does. But if it doesn’t, you’re all set and don’t have to think about it again!
When it comes to federal paperwork, consulting a legal professional is always the safest bet. Ultimately, though, it can’t hurt to file if you don’t need to, but failing to file if you have to can spell trouble.