We work with many business owners, including some of you, and each of you may have friends who own a business, so we thought it would be helpful to share information about a recent regulatory change that may be relevant: the Corporate Transparency Act (CTA). The CTA requires that any business owner with more than a 25% direct or indirect interest in a company must be included in the company’s beneficial ownership information (BOI) report. This report, which is filed with the Financial Crimes Enforcement Network (FinCEN), includes details such as your name, date of birth, address, and other identifying information.1 Who Needs to File? If you own more than 25% of a company, directly or indirectly, you may be included in the company’s BOI report. The new BOI rules apply to a wide range of business types, including limited liability companies (LLCs).1 Exemptions1
What is the Goal of the CTA? The CTA aims to increase transparency and combat money laundering by requiring businesses to disclose their true ownership. Deadlines for Compliance Businesses formed before January 1, 2024: Deadline – January 1, 2025 (if you meet the ownership threshold) Businesses formed after January 1, 2024: Deadline – 90 days after receiving approved state business registration Helpful Resources For simple questions, you may find some answers on the Financial Crimes Enforcement Network website under Beneficial Ownership Information.2 Don’t Go It Alone Despite the significance of these changes, many small business owners are unfamiliar with the new requirements. A 2024 survey found that nearly 47% of small-business owners were unaware of the CTA, while another 25% were unsure whether they were required to report.3 Failure to report ownership information to FinCEN can result in criminal and civil penalties. Willful noncompliance can also result in fines of up to $591 per day for each violation.3 We’re providing this information to help you stay abreast of current legislation. It’s not a substitute for real-life guidance, which should come from your tax, legal, or accounting professional. But if you’re struggling to find more detailed information or if you have questions about how business ownership fits into a family’s overall financial strategy, we may be able to help. We can introduce you to tax or legal professionals who can speak to the new rules and share some insights. |
1. Federal Register, 2024 2. Morgan Lewis, April 19, 2024 3. WSJ.com, February 8, 2024 This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. |
Important Update: New Beneficial Ownership Reporting Requirements for Businesses
