Please pay close attention to this blog as a small business owner! 2024 is bringing changes for many small business owners like you, mostly LLCs, through the enacting of the Corporate Transparency Act (CTA) and the new mandate of the Beneficial Ownership Report. The complete name of the new report is the Beneficial Ownership Information Report (BOI or BOIR).
Let’s talk about what the CTA and BOI are and the impact and significance for you:
UNDERSTANDING THE CORPORATE TRANSPARENCY ACT
The Corporate Transparency Act, or CTA, signed into law by Congress in January 2021, aims to enhance corporate transparency and combat illicit financial activities, such as money laundering, tax evasion, and terrorism financing. The Act introduces new regulations mandating companies to disclose their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). FinCEN is the top Financial Intelligence Unit under the United States Department of the Treasury, dedicated to combatting financial crimes within the USA.
WHAT IS A BENEFICIAL OWNERSHIP?
Beneficial ownership refers to the individuals who ultimately own or control a company, even if their names aren’t on legal formation documents. This could include individuals who hold significant ownership percentages or exercise substantial control over the company.
IMPORTANCE OF THE BENEFICIAL OWNERSHIP REPORT
Starting January 2024, certain companies—primarily small businesses, LLCs, and other similar entities like yours —must submit the beneficial ownership report to FinCEN. This includes personal details such as names, dates of birth, addresses, and identification numbers of all beneficial owners of the small company.
SIGNIFICANCE FOR YOU AS BUSINESS OWNERS
- Legal Compliance: Is a new mandate. Non-compliance can lead to hefty penalties and legal consequences. Accurate and timely submission of BOI report with FinCEN.gov is crucial to avoid fines or potential business disruptions.
- Transparency and Accountability: Businesses contribute to a more transparent financial system by disclosing beneficial ownership. This can help prevent financial crimes and maintain the integrity of businesses.
- Enhanced Trust: Transparent disclosure of beneficial ownership information can enhance trust and credibility with partners, customers, and stakeholders, strengthening commitment to ethical business practices.
- Adaptation and Preparation: Business owners must understand the requirements, gather necessary information, file report with FinCEN.gov, and implement processes to ensure timely and accurate reporting.
STEPS TO PREPARE YOUR BOI REPORTING
- Identify Beneficial Owners: Determine individuals who meet the criteria for beneficial ownership according to the CTA.
- Gather Information: Collect required details such as names, addresses, dates of birth, and identification numbers for each beneficial owner.
- Establish Reporting Processes: Create internal protocols or seek professional assistance to ensure accurate and timely reporting to FinCEN. Attorney Marcos offers timely assistance to comply with this new mandate.
- Stay Updated: Please keep in mind any updates or changes in regulations to ensure ongoing compliance.
The platform to file the BOI – Beneficial Ownership Report with FinCEN.gov is active. According to a Wall Street Journal Article, 400,000 businesses have reported their beneficial owners out of an estimated 32 million small businesses and LLCs in the USA. There is so much to do to educate the small business community about this new mandate!
CONTACT US NOW:
The Corporate Transparency Act’s Beneficial Ownership Reporting (BOI-BOIR) mandate, is a shift towards greater transparency and accountability in the business landscape. Business owners must familiarize themselves with CTA and the Beneficial Ownership Reporting, gather necessary information, file the report with FinCEN.gov and establish processes to comply with these regulations. Embracing these changes ensures legal compliance and contributes to a more transparent and trustworthy business environment. For small businesses, the process should be straightforward, as the owner or founder of the company, LLC, is, by default, one of the beneficial owners or the only one owner. Consult Attorney Marcos E. Garciaacosta, if you have questions.
Remember, seeking professional guidance or legal advice can be crucial in navigating these regulatory changes effectively. Contact us at (480) 324-6378 or e-mail us at [email protected]