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Four Important Things to Know About Beneficial Ownership Information Reporting

Beneficial Ownership Information paperwork and regularities are a concept that will come to life on January 1, 2024. This vision aims to know more about the businesses and business owners to better control trafficking, money laundering, and other illegal activities.

This law requires corporations, partnerships, and other business entities to file formation papers with a government agency such as the Secretary of State office, state, or a government body with a similar role. Business owners must comply with the reporting requirements under the Corporate Transparency Act (CTA) to avoid penalties.

Here are some of the most important things you must know about beneficial ownership information reporting.

  1. Notable Requirements

The requirements for reporting for every company differ from one another based on their date of registration for BOI filing. The report must be filed electronically through a secure system on FinCEN’s website to ensure the security of the personal information relevant to the reporting companies.

This law will be effective from January 1, 2024. Any reporting entity formed before 2023 will have to file the report within 30 calendar days. However, the business entities that were already in existence before 2024 do not need to be concerned until the year 2025. 

  1. Failure to Comply

Although the system for BOI filing is not available yet, people already want to know what implications failure to comply can have for the reporting companies. These penalties can be imposed on the beneficial owners or business entities.

While minor offenses related to BOI filing can cost up to $500 every day, a willful failure to report may lead to up to $10,000 in fines faced by the business or the owner and 2 years of imprisonment as well. All businesses are always recommended to stay updated regarding their district and state laws.

  1. Eligible Companies for Reporting

These requirements can concern small and mid-sized businesses. According to FinCEN, an estimated 32 million business entities are expected to comply with more than 5 million new entities that must file reports every year. 

However, businesses that are already highly regulated, such as accounting firms, security dealers, and insurance companies, are not currently facing the challenges of reporting rules. In total, there will be 23 exceptions from the governing regulations. You may want to have legal help on board to determine whether your business entity is termed as a reporting company according to this act.

  1. Information and Confidentiality

The information provided by a reporting company must be submitted through a secure online medium. You can find the pathway on the FinCEN website. You can expect to file the following personal information with the state. Any changes to this information must be filed with FinCEN as soon as possible.

  • Legal name of the owner
  • Current Address
  • Date of Birth
  • Copy of a passport, driver’s license, or state identification number.

The FinCEN aims to keep all this information safe and secure. However, it can be shared with legal authorities under severe circumstances. You can ask a legal professional about any other concerns regarding the confidentiality of your personal information.

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