The "Immediate Release" statement from FinCEN on September 29, 2022, announced the issuance of a final rule related to the "Beneficial Ownership Information Reporting Rule" pursuant to the Corporate Transparency Act (CTA). A rule designed to crack down on illicit finance and enhance transparency in the U.S. financial system.
What does this mean for Small Business Owners?
New Reporting Requirements: This rule requires most corporations, limited liability companies (LLC’s) and other entities created or registered to do business in the U.S. to report information about their beneficial owners ** to the FinCEN. **Beneficial Owners are individuals who ultimately own or control the company or entity.
Why is this important? By requiring collection of The Beneficial Ownership Information from all businesses, this rule aims to prevent criminal or illicit activity such as drug and human traffic rings, by not allowing anonymous shell companies to conduct business. Businesses that do not comply with filing deadlines for Beneficial Ownership Information are subject to fines, penalties, and legal actions.
What is the deadline to file my information? The Rule goes into effect on Jan 1st, 2024. Reporting Companies created prior to Jan 1, 2024, will have one year (until Jan 1st, 2025) to file. Reporting Companies created on or after Jan 1, 2024, will have 30 days to file. *Note – for both new and existing Companies, there is also a requirement to file any updates to Beneficial Ownership within 30 days of that change.
This is a new ruling, small businesses should be prepared for the high probability of additions, edits and modifications to this new rule and its implementation.
FinCEN is committed to implementing this rule to its fullest extent, while not over burdening small businesses with paperwork.
Navigating this new reporting requirement can be overwhelming and intimidating, but rest easy, you don’t need to rush to close your businesses down prior to 12/31/2023! You only need to prepare to submit your proper forms in a timely fashion, letting FinCEN know who owns, benefits from, manages or makes decisions for, the business. Some argue that this information is repetitive, and an unnecessary burden on small businesses. However, it is crucial to understand that the rule aims to deter criminals from using companies as a shield. The goal is to create a better, safer place to do business.
It’s important to stay connected to the new reporting requirements and deadlines so that your business stays in compliance. For specific guidance and understanding of how this rule applies to your small business, consulting legal professionals and financial advisors is strongly recommended.
More Information: https://www.fincen.gov/news/news-releases/fincen-issues-final-rule-beneficial-ownership-reporting-support-law-enforcement
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