Owning a business and being self employed offers great freedom, but also requires staying on top of new rules and regulations so you can stay compliant with city, state, and national business and tax laws.
What is FinCEN?
The US Department of Treasury - Financial Crimes Enforcement Network (FinCEN) aims to protect the country’s financial system from money laundering and other illegal activity. The new 2024 registration requirements for businesses will increase the amount of information available, enhancing FinCEN’s ability to perform its duties. By collaborating with international financial counterparts, they can better detect fraudulent activity and ensure a more secure financial system. Their strategy is to “follow the money” using this additional information.
The support and enforcement of these acts falls under the USA Patriot Act of 2001 along with other legislation. Commonly known as the Bank Secrecy Act, this counter-terrorism financing statute authorizes the Secretary of the Treasury to issue such regulations. These may affect banks, other financial institutions, and individual business owners.
Does this Update Apply to Me?
Reporting is required for corporations, limited liability companies (LLC), and any other business entity created in the US through the Secretary of State or similar. There are 23 different types of businesses that are exempt from filing, including nonprofits and publicly traded companies. Those that are required to file are called “Reporting Companies”.
Not everyone in the company has to report or be reported on. This update is specifically for the company’s primary beneficiary. Beneficial Ownership Information (BOI) pertains to the person who gains the most from the company and generally the one that owns or controls the business.
What Information is Required in This Update?
The BOI information required contains three parts: Reporting Company, Company Applicants, and Beneficial Owners. Each section covers entity information such as name, trade, address, and tax payer ID. This can be done online and it’s free to do. It is only required once, or as needed in the case of ownership change or correction. While this was enacted January 1, 2024, businesses have one calendar year to comply. Keep in mind that if your company was created post January 1, 2024 then there is only a 90 day window to submit this information.
Disclaimer: we are not accountants or attorneys, however this regulation affects many of our clients, as well as our own real estate businesses, so we felt it is important information to share. Find out more about this FinCEN 2024 update on the website: www.fincen.gov/boi
