There is a new reporting requirement that small business owners need to know about. As of January 1, 2024 tens of millions of small businesses will need to file a beneficial ownership information (BOI) report with a branch of the U.S. Department of Treasury called the Financial Crimes Enforcement Network (better known as FinCEN). A failure to comply can result in a company and the individuals responsible for the non-compliance being subject to hefty civil and criminal fines and even possible jail time.

If you formed a corporation (S corp or C corp) or a limited liability company (LLC), a BOI report will have to be filed unless your corporation or LLC qualifies for an exemption. Corporations and LLCs are the only business entity types specifically referred to in the Rule. However, entities other than corporations and LLCs may also have to file. The key is whether you had to file a document with the secretary of state or a similar office to create your company. And while not addressed in the Rule, FinCEN has commented that it believes sole proprietorships and most general partnerships would not have to file a report because they do not require the filing of a formation document.

There are 23 exemptions allowed by the Corporate Transparency Act. If your corporation or LLC has more than 20 full-time employees, more than $5 million in gross receipts, and an operating presence at a physical office in the USA, it can qualify for an exemption granted to what is called a “large operating company”. Certain types of inactive entities that were in existence on or before January 1, 2020 are also exempt.

Assisting you with your compliance with the Corporate Transparency Act (“CTA”), including beneficial ownership information (“BOI”) reporting, is not within the scope our services that we provide. You have sole responsibility for your compliance with the CTA, including its BOI reporting requirements and the collection of relevant ownership information. We shall have no liability resulting from your failure to comply with CTA. Information regarding the BOI reporting requirements can be found at https://www.fincen.gov/boi. Consider consulting with legal counsel if you have questions regarding the applicability of the CTA’s reporting requirements and issues surrounding the collection of relevant ownership
information.