No More Hiding Behind Shell Company Names! © Cynthia C. Rignanese, Esquire
For small businesses, a big new change is coming on January 1, 2024! That is the day means that Beneficial Ownership Information (BOI) reporting is required to promote transparency in companies. If you are a small corporation or LLC, you will likely need to file this mandatory report!
BOI reporting refers to the process of identifying and disclosing the individuals or entities that have significant ownership or control over a company or asset. In simpler terms, it involves determining the people who ultimately own or have power over a business.
When a company is formed, it usually has shareholders who own its shares. However, there may be individuals or groups who have a substantial influence over the company's decisions and activities without actually appearing as official shareholders. These individuals are considered beneficial owners.
BOI reporting requires companies to identify and disclose these beneficial owners. The purpose is to increase transparency and prevent activities like money laundering, corruption, or tax evasion. By knowing who the actual owners are, authorities can better monitor and regulate businesses to ensure fair and legal practices.
Persons who exercise substantial control over the company or own at least 25% of the company are considered beneficial owners. The information disclosed on the owner in BOI reports includes the name, address, and birth date. Images of identification documents for owners must be submitted. This information helps authorities and other stakeholders understand the true ownership structure of a company and identify any potential risks or conflicts of interest.
Overall, BOI reporting is a way to promote transparency and accountability in the business world, ensuring that companies operate in a fair and lawful manner while discouraging illicit activities.
In Florida, starting in 2024, when an entity registers to do business, the filing will be required within 30 days. For entities formed on or before December 31, 2023, will have one year to file their initial reports. This will apply to corporations, LLCs, P.A.s, and PLLCs. There are exemptions; these include large entities (20 or more full-time employees and $5m annual gross receipts or aggregate sales); banks; and tax exempt entities.
FinCEN anticipates at least 39 million filings in 2024 and over 20 million per year thereafter. It estimates that a filing will take 90 minutes for a simple filing. The filing itself is free, but services will charge a fee to perform this service.
FinCEN stands for the Financial Crimes Enforcement Network. In simple terms, FinCEN is a government agency in the United States that is responsible for combating financial crimes, such as money laundering, terrorist financing, and other illicit activities.
FinCEN operates under the umbrella of the U.S. Department of the Treasury and serves as a central hub for collecting, analyzing, and sharing financial intelligence. Its main goal is to protect the financial system from being exploited by criminals and to ensure the integrity of the U.S. financial system.
Resources include:
FinCEN at https://fincen.gov/boi
The Fact Sheet at: https://fincen.gov/beneficial-ownership-information-reporting-rule-fact-sheet
If you have questions on your business, please reach out to us at 141 5th Street NW, Suite 300, Winter Haven, Florida 33881 at 863.294.1114.
Established in 1991, Rignanese & Associates is available to work with clients on their individual and business’ legal needs.