Federal Beneficial Ownership Information (BOI) Reporting Now Required For Small Businesses
Under the Corporate Transparency Act (CTA), a substantial part of the Anti-Money Laundering Act enacted in 2020, non-exempt small businesses must submit a Beneficial Ownership Information (BOI) report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network before January 1st, 2025 to remain compliant, provided the business’ beneficial ownership information doesn’t change after initial submission.
Domestic reporting companies chartered on or after January 1st, 2024 and before year’s end must submit their BOI report within 90 days of its creation; from the start of next year, and in the case of inaccurate disclosure, these businesses will have much less time to file — just 30 days. Reporting companies include any corporation, limited liability company, or other entity “created by filing a document with a Secretary of State or similar office.”
The CTA intends to impede illegitimate activities concealed behind the facade of private shell corporations or “other entities with limited or no operations.” As such, national security and law enforcement agencies and, with consent, current or potential creditors are able to request these documents.
Which Companies are Exempt?
Exempt from this federal regulation are public companies that report to the Securities and Exchange Commission (SEC), non-profit organizations, government sponsored entities, and large operating companies: those that employ in excess of 20 employees and reported gross revenues in excess of $5 million the previous year.
Who are Beneficial Owners?
Beneficial owners are defined as “any individual who, directly or indirectly, exercises substantial control over the entity or owns or controls not less than 25 percent in the equity,” and each of whom, or the business’ sole company applicant, must disclose personal details such as their legal name, address, and a unique identification number, as found on a state ID or American passport.
If you own or operate a small business and seek guidance on how to navigate this update to federal regulation, the Law Office of Marc Scolnick, P.C. has the team to help. Call us today at (718) 554-6445 or refer to the header at the top of this page to set up a FREE consultation.
Sources: American Bar Association
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