FinCEN Beneficial Ownership Information

If you are a small business owner, you just had another chore added to your list. The Corporate Transparency Act (CTA) went into effect on January 1, 2024. The CTA requires a new federal filing for most corporations and limited liability companies (LLCs) with very few exceptions. Most small business owners must complete the Financial Crimes Enforcement Network's (FinCEN) Beneficial Ownership Information filing. But...

It is fairly easy! You will likely spend more time scanning your id's than completing the form. Unfortunately our governing bodies prevent us from completing this for you (we can assist, we just can’t do it for you).

The CTA’s purpose is to prevent the use of anonymous shell companies for money laundering, tax evasion, and other illegal purposes. Think of the stuff you see in tv shows and movies with car washes and restaurants around Lake of the Ozarks. Like some laws, it casts a wide net and generally inconveniences the vast majority to find a few bad characters. Then again, if you're a bad character then you likely don't give hoot about laws so this seems like window-dressing.

Some businesses are exempt from this filing including:

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

The CTA’s purpose is to compile a database of information with the contact information of the “beneficial owners” of most business entities. Beneficial owners are the humans who own or exercise substantial control over the entity. Identifying the beneficial owners is simple. For example, a four-member LLC in which each member has a quarter ownership interest has four beneficial owners.

Businesses that existed prior to January 1, 2024 have 1 year to comply (must file by Dec. 31, 2024). Businesses formed in 2024 have 90 days from formation to file this beneficial owner information report with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).

Need to File?

The beneficial owner information report is completed online at a new federal database called BOSS (an acronym for Beneficial Ownership Secure System - not just you). There are two ways to file:

File the information online or
Complete a PDF of the filing and upload it online

There are no filing fees. There are step by step instructions provided for the online and PDF filings here. 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

The information in the BOSS database is used by law enforcement, the IRS, and other government agencies. FinCEN does not disclose the BOSS information to the public. If you created entity structures for anonymity, then that is still achieved.

BOSS reporting is separate from your income tax filings and the process of forming your entity. Filing the BOSS report must become a routine part of creating most new business entities.

This is no joke! Failure to comply ( aka “non-compliance”) is $500 per day up to $10,000 fine along with other potential penalties.

Some additional thoughts...

Rental properties held in an LLC must comply and file (sigh...we get it, but it is what it is)
If you own or control 25% or more of a “reporting company,” you are deemed a beneficial owner, and the information above must be supplied (excluding minor children)
Businesses formed/created during 2024 have 90 days (was 30 days), and businesses that existed prior to January 1, 2024 have 1 year to comply (must file by Dec. 31, 2024)
Compliance is a one-and-done situation unless the beneficial owner changes (then you have 30 days to file the update)
A full guide to the BOI can be found here: FinCEN’s Beneficial Ownership Information