Beneficial Ownership Reporting – What Does this Mean for your Small Business?
Beneficial ownership reporting is the process of providing information to the US government about the people who ultimately own or control a company. The goal of this reporting is to increase transparency in business ownership and reduce illegal and fraudulent activity.
The Corporate Transparency Act of 2021 (CTA) is a federal law that requires businesses to disclose information about their owners and controllers to the Financial Crimes Enforcement Network (FinCEN), a bureau of the United States Department of the Treasury. The CTA went into effect on January 1, 2024 and companies must report the following information for each beneficial owner:
- Legal name
- Date of birth
- Residential address
- Unique identifying number from an acceptable ID document
- Name of the state or jurisdiction that issued the ID document
- Image of the ID document
Companies can file their reports electronically through FinCEN's website at no cost. Filing is usually a one-time requirement, unless the company needs to update or correct information. There are substantial penalties for failure to file a report or provide false information.
More information about beneficial ownership reporting is available on FinCEN's website at https://www.fincen.gov/boi. For assistance with filing the required report, contact your business attorney or tax accountant.
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