There is a new federal regulation impacting tens of millions of small businesses this year, and you need be aware of it. The U.S. Department of Treasury now requires most small companies to hand over details about their ownership via the Beneficial Ownership Information (BOI) rule under the Corporate Transparency Act.
The Treasury Department says the database of owners is necessary to prevent criminals from unlawfully hiding assets through shell companies or other opaque ownership structures, but critics argue it is governmental overreach and a violation of privacy.
Despite opposition from small business groups last year, the new rule was finalized and is now in force.
Information is submitted to the Financial Crimes Enforcement Network (FinCEN), a bureau of the Treasury Department charged with preventing crimes like money laundering.
A BOI report will give FinCEN clarity on who owns a significant portion of a business and/or who has control over operations.
Generally, reporting companies must provide four pieces of information about each beneficial owner: (1) name, (2) date of birth, (3) address, and (4) government-issued ID, such as a driver’s license.
Businesses in existence prior to January 1, 2024, have until January 1, 2025, to report. Businesses formed on or after January 1, 2024, must report beneficial ownership information within 90 days. Businesses formed on or after January 1, 2025, must report beneficial ownership information within 30 days.
If you have updates or corrections to previously filed information, you must submit it
within 30 days.
BOI reporting is not an annual requirement. A report only needs to be submitted once, unless you need to update or correct information.
To learn more about the BOI regulation, go to the BOI page set up by FinCEN at: https://www.fincen.gov/boi.
* This article does not constitute legal advice.