Minnesota small business owners likely recently received an email from the Minnesota Secretary of State regarding the new reporting requirements for Beneficial Ownership Information to FinCEN is a bureau of the U.S. Department of the Treasury. Beginning January 1, 2024, many companies in the United States will have to report information about their beneficial owners, the individuals who ultimately own or control the company. This new reporting requirement comes from the Reporting Rule, 2 issued on September 30, 2022, implementing Section 6403 of the Corporate Transparency Act.
I have been asked “What does this mean?” and “Do I need to do anything?” in regard to this email and new reporting requirement. As always please consult with an attorney about your specific situation and business; however, here are some questions to consider to determine if you do or do not need to report in the 2024.
Does my company need to report its beneficial owners?
- If the company is a Corporation, LLC or other company where you filed documents with the Secretary of State it is likely a domestic reporting company. The Reporting Rule exempts twenty-three (23) specific types of entities such as banks, securities dealers, accounting firms, tax exempt entities and others.
If my company needs to report who is the beneficial owner(s)?
- A beneficial owner is any individual who, directly or indirectly exercises substantial control over the company or owns or controls at least 25 percent of the ownership interests in the company. A company can have multiple beneficial owners.
What information does my company need to report?
- The company needs to report its full legal name, any trade name or “doing business as” name(s), complete current U.S. address, the address of the principal place of business in United States, Internal Revenue Service Taxpayer Identification Number (TIN)/Employer Identification Number (EIN).
- Each Beneficial Owner needs to report each person’s full legal name, date of birth, complete current address, unique identifying number and issuing jurisdiction, and an image of one of the following non-expired documents: a U.S. passport, a State driver’s license, or identification document issued by a state, local government, or tribe.
Okay, I have determined I need to report the BOI. When and how does my company file the initial report?
- Provided your company exists prior to January 1, 2024 you need to file the initial BOI report before January 1, 2025. The report will be filed in FinCEN’s electronic filing system, which is currently under development. FinCEN will publish instructions and other technical guidance on how to complete the BOI report form.
What happens if I report and something changes or I find I reported something incorrectly?
- If you find a change to the required information about your company or its beneficial owners in a BOI report previously filed, your company must file an updated BOI report no later than 30 days after the date on which the change occurred.
The reporting requirement starts on January 1, 2024; the willful failure to report complete or updated beneficial ownership information to FinCEN may result in a civil or criminal penalties, so it is important for you to determine if you or your business need to report in 2024 and make a plan to report if necessary for your business. You can visit https://www.fincen.gov/boi/small-entity-compliance-guide for the full Small Entity Compliance Guide which includes multiple flow charts, question and answers and other details to help you determine if and/or what you need to report. If you still have questions please reach out to a local small business attorney to help you determine if and what you need to report in 2024.