What You Need To Know About FinCEN Reporting

New Law For LLCs, S-Corps, & Corporations – FinCEN (Financial Crimes Enforcement Network)

If you own a business that’s a (corporation, limited liability company (LLC), or any other entity created by filing a document with your secretary of state), you are required to file your BOI (Beneficial Ownership Information) with FinCEN.

 

FinCEN stands for Financial Crimes Enforcement Network.

 

The first stage of the Corporate Transparency Act (CTA) that went into effect on January 1, 2024, imposes a new federal filing requirement for most corporations and limited liability companies (LLCs).

 

The purpose of this new law is to prevent the use of anonymous shell companies from money laundering, tax evasion, and other illegal activities.

Some businesses are exempt:

  • sole proprietors (those who have not created an entity with the Secretary of State)
  • large businesses—businesses with more than 20 full-time employees or $5 million in receipts on their prior-year tax return,
  • certain businesses already heavily regulated by the government, such as banks and insurance companies,
  • nonprofits, and
  • several others (see list here)

The CTA’s purpose is to compile a massive government database containing the identities and contact information of the “beneficial owners” of most types of business entities. Beneficial owners are the humans who own or exercise substantial control over the entity.

The beneficial owners are the owners of the business or the controlling manager. For most companies, identifying the beneficial owners is simple. For example, a three-member LLC in which each member has a one-third ownership interest has three beneficial owners. Each owner would need to be identified for that LLC.

If your business entity was formed with your secretary of state prior to 1/1/24, you have until 12/31/24 to file your BOI report.

If you form your entity during 2024, you must file your BOI report within 90 days of formation. The report must contain the following for each beneficial owner:

  • Full legal name
  • Date of birth
  • Complete current residential street address
  • A unique identifying number from a current U.S. passport, state or local ID document, driver’s license, or foreign passport
  • An image of the document that contains the unique identifying number (Ex: digital copy of your drivers license)

This reporting is separate from your state and local filings when forming a new business entity. But from now on, filing the BOI report must become a routine part of creating most new business entities.

Failure to comply is $500 per day up to $10,000. and 2 years in prison – They’re not messing around.

 

Just a side note – if you own Rental properties held in an LLC, you must file the BOI report. If you own an IRA LLC, you must file the report. If you own any LLC, you must file the BOI report unless you qualify as exempt. (see list here)

 

If any of your information changes after you file this report, you have 30 days to update it.

The following are some examples of the changes that would require an updated beneficial ownership information report:

  • Any change to the information reported for the *reporting company, such as registering a new business name.
  • A change in beneficial owners, such as a new CEO, or a sale that changes who meets the ownership interest threshold of 25 percent.
  • Any change to a beneficial owner’s name, address, or unique identifying number previously provided to FinCEN. If a beneficial owner obtained a new driver’s license or other identifying document that includes; changing their name, address, or identifying number, you will need to file an updated beneficial ownership information report with FinCEN for that company and include an image of the new identifying document showing the new information.

*Reporting company is your business.

 

Download a copy of their compliance guide for reference.

 

Here’s a link to their Frequently Asked Questions (FAQ)

 

 

Where to File Your BOI Report

 

It is super easy. You will spend way more time scanning your drivers license than completing the form.

 

The beneficial ownership information report is filed online at a new federal database called BOSS (an acronym for Beneficial Ownership Secure System). Go to their website to file https://www.fincen.gov/boi

 

There are no filing fees. The information in the BOSS database is strictly for use by law enforcement, the IRS, and other government agencies. FinCEN does not disclose the BOSS information to the public.

There are two ways to submit the filing:

  1. Complete a PDF and upload to their site, or
  2. Complete the online form.

Your accountant probably won’t file this for you because their E&O insurance won’t let them. However, it really is an easy process.  

 

Keep in mind, if your business existed on December 31, 2023, you have until January 1, 2025 to comply (and we suspect this will be extended since everyone is freakin’ out).

 

Here’s an overview of when you are required to file:

  • Your business (LLC) was created or registered to do business with your state before January 1, 2024, you will have until January 1, 2025, to file its initial BOI report.
  • Your business (LLC) was created or registered to do business with your state in 2024, you will have 90 calendar days to file after receiving actual notice that its creation or registration is effective.
  • Your business (LLC) will be created or registered to do business with your state on or after January 1, 2025, you will have 30 calendar days to file after receiving actual notice that its creation or registration is effective.

Having done this for my own business and rental LLCs, the process is simple. Just remember to take a picture of your drivers license so you have a digital copy of it before beginning the process. You will need a digital copy of every beneficial owner for that LLC.  If you have 3 partners in your business, you will need to upload every partners drivers license when you file the BOI report.

 

You probably don’t need to create a FinCEN ID unless you have several businesses to register and want to save yourself a few keystrokes.

 

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