Why This Matters to Every Business Owner
Bryant & O’Connor Law Firm is committed to sharing important information that you might find helpful, but this post is particularly urgent. FinCEN’s Beneficial Ownership Information Reporting Rule under the Corporate Transparency Act is a new hoop that business owners must jump through in 2024 and beyond. Congress passed the Corporate Transparency Act in 2021 to combat bad actors who use shell companies to commit money laundering, tax fraud, and other illicit activities. This new mandate affects nearly all LLC and Corporation owners, with very few exceptions. If you have an LLC, Corporation, or other entity registered with the Secretary of State prior to 2024, unless you fit a narrow exception, you must file a Beneficial Owner Information Report by December 31, 2024. If your company was created in 2024 or later, you likely have a more limited amount of time to comply. Companies formed in 2025 and later will only have 30 days to comply.
What is Beneficial Ownership Information?
Beneficial ownership information refers to details about individuals who own or control a company, either directly or indirectly. This means if you hold substantial stakes or play a significant role in decision-making in an LLC or Corporation, these changes concern you. Each 1) owner of a 25% interest or greater in a company and 2) each person with substantial control over the company must be reported. For more details, please refer to FinCEN’s FAQ’s.
Penalties for Non-Compliance
The penalties for failing to comply are substantial. The civil penalty amounts to $500 per day for failure to accurately report. Furthermore, willful neglect or misinformation could lead to up to two years in prison. Therefore, this is not something to take lightly.
The Role of Legal and Accounting Professionals
The expectation is that reporting will not be overly complicated for many entities, which means self-reporting without professional assistance is possible. However, seeking professional guidance from attorneys or CPAs may be prudent to ensure accuracy and compliance. When you are forming a new company going forward, your attorney should address this reporting requirement with you, or if not, you need to proactively address this with them. However, for corporations and LLCs formed before 2024, you are unlikely to have engaged your attorney to help you complete this additional requirement, and thus you will need to reach out to them if you’d like to hire them to handle this. Although this may be seen as a burden, it is at least a good opportunity to make sure your company records and ownership information and documents are up to date.
How We Can Help
At Bryant & O’Connor Law Firm, we understand that these new requirements may create a burden for some of you. We’ve filed over a hundred of these reports and expect many people will be calling us before the end of the year. To ensure we can help you before it’s too late, please call as soon as possible because we may not be able to facilitate last-minute requests. Please note that if we helped you create a company prior to January 1, 2024, we will not have been engaged to fulfill your reporting obligations, and therefore it’s your obligation to proactively reach out to us if you’d like our help.
Conclusion: Proactive Compliance is Key
With the new FinCEN reporting requirements, proactive compliance is crucial. While the process may seem daunting, understanding and preparing for these changes is vital to avoid hefty penalties and legal complications. We’re here to help.
Disclaimer
This blog post is intended for informational purposes only and is not legal advice or the creation of an attorney-client relationship. Please call us if you would like assistance with this matter or another area of our practice.