Beneficial Ownership Information Reports

As of January 1, 2024, the United States Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) has begun accepting beneficial ownership information reports, designed to assist in preventing financial crimes. These reports are required by nearly every company, both foreign and domestic, that was created or registered to do business in the United States by filing a document with their secretary of state or similar office.

Companies Required to Submit Beneficial Ownership Information Reports

Any company which is created by filing a document with any State’s secretary of state or similar office is required to submit a beneficial ownership information report with FinCEN. Additionally, any foreign company that is registered to do business in the United States and obtained such registration by filing a document with any state’s secretary of state or similar office is also required to submit a beneficial ownership information report with FinCEN.

However, certain companies are exempt from filing a beneficial ownership information report, including accounting firms, tax-exempt entities or entities assisting tax-exempt entities, inactive entities, and subsidiaries of certain exempt entities. It is important to consult with an attorney or tax professional to determine if you are exempt from these new reporting requirements.

Any company which is required to have its owners submit a beneficial ownership information report is known as a “reporting company.”

Submitting a Beneficial Ownership Information Report: Beneficial Owners and Company Applicants

Generally, any person who is authorized to act on behalf of the reporting company will be allowed to submit a beneficial ownership information report with FinCEN on behalf of the reporting company but will be required to provide basic contact information for themselves. A beneficial ownership report requires the submitter to provide basic information related to the reporting company’s formation, as well as basic information related to the reporting company’s formation. Additionally, the submitter will need to provide basic contact information and identification for all “beneficial owners” of the reporting company.

A beneficial owner is any person who owns or controls at least 25% of the reporting company’s interest, or a person who otherwise exercises “substantial control” over the reporting company. A person who exercises substantial control and thus is a beneficial owner is generally someone who is a senior officer of the reporting company, important decisionmaker for the reporting company, or has the power to appoint or remove directors or officers of the company – however, other individuals may be considered “beneficial owners.” Some individuals who may be considered beneficial owners are exempt from being reported as one if they, for example, are a creditor of the reporting company or person acting as a beneficial owner’s nominee or agent. It is important to consult with an attorney or tax professional to determine if you or other members of your company are beneficial owners, or whether you or other members of your company are exempt from being considered a beneficial owner.

Companies created or registered to do business in the United States on or after January 1, 2024, will further be required to report and identify its “company applicants” with FinCEN. Company applicants are individuals who either applied for or directed and controlled the filing of the application with the state’s secretary of state. Reporting companies created or registered to do business in the United States prior to January 1, 2024, will not be required to report their company applicants in their beneficial ownership information reports.

It is important to review your beneficial ownership information reports closely before submission, as inaccuracies can result in penalties to your reporting company. Any inaccuracies must be reported within 30 days of when the company became aware of it, or may subject the reporting company to penalties.

Beneficial Ownership Information Reports Deadlines

The date on which your reporting company was created or registered to do business in the United States will impact date in which you must submit your beneficial ownership information report by.

Reporting companies created or registered to do business in the United States before January 1, 2024, will have until January 1, 2025, to submit their beneficial ownership reports to FinCEN. Reporting companies created or registered to do business in the United States after January 1, 2024, but before January 1, 2025, will be required to submit their beneficial ownership information report within 90 days of receiving notice that their company has become effective. Reporting companies created or registered to do business in the United States after January 1, 2025, will be required to submit their beneficial ownership information report within 30 days of receiving notice that their company has become effective.

Updating Beneficial Ownership Information Reports

After submitting your beneficial ownership information report, important changes to your reporting company must be reported to FinCEN in an updated beneficial ownership information report within 30 days of the change. Important changes include changes such as changes in registration or beneficial owners or their names and addresses.

These changes are likely to impact most owners or members of companies, including partnerships, corporations, and limited liability companies. If you have questions about submitting a beneficial ownership information report, our offices are here to assist you. Call today for a free consultation at (561) 279-6771.

This article is not intended to be legal advice, nor create an attorney-client relationship.