2024 new business reporting

Big News Flash! There’s new business reporting in 2024.
What does this mean for you?

There’s been a lot of talk about this lately, and I want to make sure you have the right information and know exactly what you need to do about this new reporting in 2024.

So what’s it all about?

As part of the Corporate Transparency Act (CTA) passed a couple of years ago, the federal government is starting to require the disclosure of all people who own (at least 25%) and control (make major decisions) each business in the US.  The purpose of the CTA is to give law enforcement more information to stop money laundering and the hiding of illicit funds in businesses.

Did you know that the US is ranked as the second most financially secretive jurisdiction, behind only the Cayman Islands?  Even Switzerland is less secretive than the US! So we can understand the need to have more systems in place to combat criminals and terrorists. HOWEVER, that means that LLC’s and corporations have to do more reporting.

So, here’s the bottom line = you will need to file a new report in 2024 (unless you fall into one of the exceptions discussed below, which is unlikely if you’re a small business).

Here’s 10 things you need to know about this new report:

  1. If your business exists before January 1, 2024, you have until January 1, 2025 to file the report.
  2. If your business is new in 2024, you have 90 days to file the report (from the date of formation).
  3. The report is filed with United States Treasury Department’s Financial Crimes Enforcement Network (FinCEN). It is done online through their portal (which opens January 1, 2024). Here’s the website: https://www.fincen.gov/boi
  4. For the business itself, here’s what you have to include in the report:
    • LLC/corporation’s official name
    • All fictitious names (d/b/a’s)
    • Current street address of the principal place of business
    • State of Formation
    • EIN
  1. Each LLC/corporation also must report the “beneficial owners” of the business. These are humans who own at least 25% of the business OR exercises substantial control over the business. See below for more information on what substantial control means.
  2. For each “beneficial owner” here’s what you have to include in the report:
    • Individual’s full name
    • Date of birth
    • Home address
    • US driver’s license number or passport number
    • Photo of US driver’s license or passport number
  1. Once you file the report, you don’t have to file it again unless the information changes. If there are any changes to names, addresses, identification numbers, etc., then you must file an updated report within 30 days of the change. (This one will be hard to remember, so I predict some issues here.)
  2. There is no fee to file the report.
  3. No financial information is included in the report.
  4. The information reported is kept in a secure governmental database only accessible to law enforcement and certain banks for regulatory compliance purposes.

Here’s a few more details if you want them:

Company Applicants

For new businesses formed after January 1, 2024, the report must also identify the “Company Applicants”.  Who are Company Applicants?  These are the humans that actually file the Articles with the state to form the LLC or corporation.  This may be someone that is part of the business, or it may be an attorney or a CPA.  There may be more than one Company Applicant (such as a paralegal in a law firm and their supervising attorney).

For each Company Applicant, the report has to include:

  • Individual’s full name
  • Date of Birth
  • Address (home or business, depending on circumstances)
  • US driver’s license number or passport number
  • Photo of US driver’s license or passport number

This requirement for Company Applicants is likely to mean that fewer CPA firms and law firms will be willing to form new companies.  But don’t worry!  The Legal Department will continue to form new entities and is willing to be a Company Applicant for our clients.

*Note: Company Applicant information does not need to be updated if it changes after the initial report is filed.

FinCEN Identifiers

For those people who are interested, or those who file many reports, it is possible to obtain a FinCEN identifier that can be used on reports instead of individual identification numbers.  To obtain a FinCEN identifier, an application has to be submitted online.

Substantial Control

So what does “substantial control” mean?  If someone does NOT own at least 25% of the business but still makes major decisions, then they have “substantial control” over the business and therefore are still a “beneficial owner” to be reported.  The following people are deemed to have substantial control:

  • A senior officer (President, CEO, CFO, COO, etc.)
  • Someone who has authority to appoint or remove officers or a majority of directors
  • Someone who makes important decisions about a reporting company’s business, finances, and structure.

That makes it all clear, right?!….

That’s okay – if you need help determining who has “substantial control” we can help!

Exceptions
Here are the limited exceptions from having to file a report:

  1. Securities reporting issuer
  2. Governmental authority
  3. Bank
  4. Credit union
  5. Depository institution holding company
  6. Money services business
  7. Broker or dealer in securities
  8. Securities exchange or clearing agency
  9. Other Exchange Act registered entity
  10. Investment company or investment adviser
  11. Venture capital fund adviser
  12. Insurance company
  13. State-licensed insurance producer
  14. Commodity Exchange Act registered entity
  15. Accounting firm
  16. Public utility
  17. Financial market utility
  18. Pooled investment vehicle
  19. Tax-exempt entity
  20. Entity assisting a tax-exempt entity
  21. Large operating company
  22. Subsidiary of certain exempt entities
  23. Inactive entity

Conclusion

If your business already exists, you have until January 1, 2025 to file a report.  You do not need to include the Company Applicants.

If your business is new in 2024, whoever helps you form it will need to file the report for you OR provide their information so you can file the report yourself.  At TLD, we gladly handle the filing of reports for new entities!