The Financial Crimes Enforcement Network (FinCEN) recently implemented a significant rule that affects businesses across the United States. As a business owner, it’s crucial to understand this new requirement and ensure compliance.

What Is the New Mandate?

The Corporate Transparency Act (CTA) introduced a beneficial ownership information reporting provision. Under this rule, most businesses—whether corporations, S corporations, partnerships, or other entities—must report their beneficial owners to FinCEN. The goal is to enhance national security, prevent illicit use of the financial system, and identify potential bad actors.

Who Needs to File?

The new rule applies to a wide range of entities, except sole proprietors and certain exempted categories. If you’re a business owner, you’ll need to report any stockholders who own 25% or more of your company. Additionally, beneficial owners include individuals with substantial control over your entity, such as CEOs, CFOs, or chief operating officers. The rule provides standards for determining ownership interests, covering not only shares but also profit interests, warrants, options, and other instruments. The Agency’s Small Entity Compliance Guide provides specific information about reporting obligations and exemptions.

When to File?

The reporting period began on January 1, 2024, and businesses must submit their BOI reports by December 31, 2024. New entities created after January 1, 2024, have 90 days from their formation to file.