What You Need to Know About Beneficial Ownership Information Reporting

By: Katie Lejong, Landmark CPAs

Starting January 1, 2024, you may be required to report information about the individuals who own or control your company to the U.S. Department of Treasury’s Financial Crimes Enforcement Network, also known as FinCEN.

While certain companies will be exempt from this reporting requirement, most businesses formed in the United States will have to submit this information on or before the deadline. It is VERY important that you understand the process — because the last thing anyone wants is the Department of Treasury coming after them! So let’s dive in.

IN THIS ARTICLE: Effective January 1, 2024, all beneficial owners of an organization (with a few exceptions) must be reported to the Financial Crimes Enforcement Network.The purpose of this new requirement is to help prevent terrorists and other illicit individuals from hiding money or property within the United States.This new reporting requirement will impact many corporations — including LLCs — and there will be a penalty for those who do not comply before the deadline.

What is beneficial ownership information reporting?

In order to fully explain this, let’s travel back in time to 2021 when Congress passed the Corporate Transparency Act. This act was designed to “provide law enforcement with beneficial ownership information for the purpose of detecting, preventing and punishing terrorism, money laundering and other misconduct through business entities.” The Beneficial Ownership Information Reporting rule is a new requirement under the Corporate Transparency Act.

This reporting requirement essentially mandates that a majority of U.S.-registered companies will now have to disclose details about the company, the beneficial owners (individuals who own or control a minimum of 25 percent of a company), and in some cases, company applicants (individuals who filed or controlled the filing of the initial document that created the company).

How can business owners stay compliant?

You’re probably wondering what you have to do to stay compliant and stay out of trouble. Let’s go over the who, what, and how of this new reporting requirement:

Who must comply with beneficial ownership information reporting?

Most corporations, LLCs, and other business entities will be required to submit their information to FinCEN. In the simplest terms, if you are a domestic or foreign company that has registered to do business in the United States, and you created your company by filing with a secretary of state (or similar office), you are likely required to submit beneficial ownership information.

There are some exceptions to this — 23 of them, to be exact. Banks, credit unions, accounting firms[1] , insurance companies, and tax-exempt businesses are all exempt. You can find a full list of exempt companies on the Beneficial Ownership Information Reporting FAQ page.

What information must you report?

For the company itself, you will have to provide:

For each beneficial owner and company applicant, you will have to provide:

How do you report this information to FinCEN?

The information must be filed electronically through a secure system on FinCEN’s beneficial ownership information reporting page. As of November 2023, that system is still being developed, but FinCEN states it will be available before the requirement goes into effect on January 1, 2024. Without being able to see the submission form, it’s hard to say exactly what the steps will be, but we expect it to be intuitive and fairly easy to complete your reporting.

There is no fee to file and you will receive a confirmation of receipt once your information has been successfully submitted. This process does not have to be done every year, but if there are changes within your organization, you may be required to submit an updated or corrected report within 30 days of the change.

What’s the beneficial ownership information reporting deadline?

FinCEN will start accepting information from companies on January 1, 2024. There are two different deadlines, depending on when your business was created or registered:

What happens if you don’t comply with the beneficial ownership information reporting requirement?

Now we know you’re probably wondering, “What happens if I don’t report this information before the deadline?” There isn’t a lot of information out there right now about specific penalties for noncompliance, but the FAQ page does state that you may face civil penalties up to $500/day and criminal penalties of up to $10,000 and/or up to 2 years imprisonment for willful non filing.

Need help with staying compliant?

An ongoing debate exists as to whether such filing needs to be done by an attorney rather than a tax preparer.  Regardless of this debate’s outcome, we are here to help you stay compliant with the new reporting requirements. If you need help or have more questions about this new requirement, get in touch with us here. 

Double check with Katie LeJong on this please – don’t think the exception applies to all accounting firms.