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Have an LLC, LLP, S Corp, or C Corp? Read This To Avoid Fines.

Updated: May 29

In 2021, Congress passed the Corporate Transparency Act and it went into effect on January 1, 2024.  The law requires businesses to report information on their owners and important decision-makers to the Financial Crimes Enforcement Network (FinCEN).  The information being reported is called beneficial ownership information or BOI.


Lawmakers hope that by requiring US business owners to report more information to FinCEN, who will share it with law enforcement upon request, the government will be able to more effectively thwart illegal activities like tax fraud, money laundering, and the financing of terrorism.


This law has direct implications for business owners in the US, who may need to report ownership information to the government to avoid criminal and civil penalties, including fines and jail time.  



The information below is to help you understand whether you may be required to file BOI but it should not be relied upon as legal advice.


Who Must File?

Anyone determined to be a reporting company must file. 


A domestic reporting company is a corporation, limited liability company (LLC), or any entity created by the filing of a document with a secretary of state or any similar office under the law of a state or Indian tribe. 


Reporting companies will likely include (subject to the applicability of specific exemptions) limited liability partnerships, limited liability limited partnerships, business trusts, and most limited partnerships, in addition to corporations and LLCs, because such entities are generally created by a filing with a secretary of state or similar office.


While you may not consider yourself a business owner, you may still have to file beneficial ownership information with FinCEN.  

 

For example, if you established an LLC for rental real estate, a side hustle, a hobby, or a small business that later closed, you could be required to file BOI.


It is important to consider any entity you created or control that was established by filing information with the state. Consider both for-profit and non-profit businesses. Even non-profit organizations and organizations like your homeowner's association could be considered reporting companies for which you have to file BOI, though tax-exempt organizations qualify for an exemption.

 

Sole proprietors who have not registered a state filing should be exempt from BOI.


Other types of legal entities, including certain trusts, are excluded from the definitions to the extent that they are not created by the filing of a document with a secretary of state or similar office (in other words, a typical estate planning trust is not considered a reporting company for BOI).

 

Certain business types may be exempt from the requirement, including those below (learn more about exempt companies here).




 When Must You File?

A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025, to file its initial BOI report.


EARLIEST DEADLINE 

A reporting company created or registered in 2024 will have 90 calendar days to file after receiving actual or public notice that its creation or registration is effective. 


A reporting company created or registered on or after January 1, 2025, will have 30 calendar days to file after receiving actual or public notice that its creation or registration is effective.

 

Who Is a Beneficial Owner?

Generally, any individual who has substantial control over a company or owns at least 25% of a company will be considered a beneficial owner.  See FinCEN for details.


What Happens If I Don’t File?

The risk of non-compliance includes criminal and civil penalties of $500 per day, up to $10,000, with up to two years of jail time.


Where Do I File?

Use this link below to file your report: https://boiefiling.fincen.gov/fileboir


Consult FinCEN and your attorney for further information about BOI.


 

 

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