Hey Business Owners!
Your friendly Insogna CPA team here, with an important update on the financial front that you need to know about. The Financial Crimes Enforcement Network (FinCEN) has recently issued a rule under the Corporate Transparency Act that's going to change the way you are required to report beneficial ownership information.
Let’s dive into what this means for you as a business owner.
Understanding the New Rule
This rule is designed to enhance transparency in the U.S. financial system. It targets illicit activities by making it harder for individuals to use corporate structures, like shell companies, to conceal their identities and launder money.
Key Aspects of the Rule
Who Needs to Report
If you have a domestic or foreign company, particularly corporations, and LLCs, you might be required to report under this rule. There are exemptions, so not all entities will be affected.
- Reporting Beneficial Owners: A beneficial owner is anyone who directly or indirectly exercises substantial control over a company, or owns at least 25% of it. The rule requires you to disclose their identities.
- Company Applicants: This refers to individuals who filed the documents to create your company or directed the filing.
- What to Report: You'll need to provide the names, birthdates, addresses, and identification details of the owners and applicants.
Cost and Compliance
FinCEN has initially said their cost for submitting an initial report is around $85.
The rule takes effect from January 1, 2024. Existing companies have until January 1, 2025, to comply, while new companies must report within 30 days of their formation.
FinCEN is working on more resources and guidelines to help companies comply with this new rule. They're also developing a secure system to store this beneficial ownership information, ensuring confidentiality and security.
What You Need to Know Now
We’ll keep an eye out for you on further updates as we await FinCEN to issue more guidance related to reporting and filing this required report for all registered entities.
If you have questions about how this might impact your reporting requirements, please reach out to us.