What Small Businesses Need to Know about Beneficial Ownership
June 13, 2024 | By Jennifer Schiffer at Bean, Kinney & Korman
This article was written by Jennifer Schiffer Attorney at Bean, Kinney & Korman.
Overview
The Corporate Transparency Act (CTA), effective January 2024, aims to combat illegal activities like money laundering and fraud. It requires many small businesses to file a Beneficial Ownership Information Report (BOIR). Here's a quick guide to help you understand and comply with these new requirements.
What is the CTA?
The CTA was introduced to increase corporate ownership transparency and help law enforcement agencies fight financial crimes. A key part of the CTA is the BOIR, which mandates businesses to report detailed information about their beneficial owners.
Do You Need to File a BOIR?
You must file a BOIR if your business:
- Has fewer than 20 employees
- Has less than $5 million in gross receipts
- Is not exempt under CTA
What Information is Required?
A BOIR includes:
- Full legal name
- Date of birth
- Residential address
- Identifying number (e.g., driver's license or passport number)
Beneficial owners are those who directly or indirectly own or control 25% or more of the company.
Steps to Comply
- Identify Beneficial Owners: Review your ownership structure to find those with significant control.
- Gather Information: Collect the required details for each beneficial owner.
- Prepare and File: Use the forms or online portals from the Financial Crimes Enforcement Network (FinCEN) for submission. Adhere to deadlines.
- Maintain Records: Keep your ownership records current and accurate.
Common Challenges and Solutions
- Identifying Owners: Thoroughly review your ownership structure and seek professional advice if needed.
- Gathering Information: Use checklists and templates to ensure all details are correct.
- Meeting Deadlines: Set reminders for filing deadlines and periodic updates.
Penalties for Non-Compliance
Failing to file a BOIR can lead to significant fines and legal consequences. It's essential to comply promptly.
Conclusion
If you own a small business with fewer than 20 employees and under $5 million in gross receipts, ensure compliance with the CTA by identifying beneficial owners, gathering necessary information, filing the BOIR on time, and maintaining accurate records.
For assistance, contact Jennifer Schiffer at (703) 526-5590 or jschiffer@beankinney.com.
This article is for informational purposes and does not constitute legal advice. Consult a lawyer for specific guidance.