New Reporting Requirements for Businesses in 2024
2024 Brings New Reporting Requirements for Most Small Businesses – Will You Be Impacted?
We have rung in a new year and along with it new reporting requirements for most small businesses. Effective January 1, 2024, under the Corporate Transparency Act, corporations, limited liability companies (LLCs) and certain other entities formed in the United States or registered to do business in the United States are now required to report to the U.S. Treasury Department's Financial Crimes Enforcement Center unit (FinCEN) information about their beneficial owners, company applicants and any changes in beneficial ownership.
The Corporate Transparency Act was passed to help law enforcement detect and prevent money laundering, tax fraud and other illicit activities by enhancing transparency in entity ownership and structure.
Entities Required to Report
The new regulations require reporting companies – corporations, LLCs and certain other entities formed or registered to do business in the United States – to disclose certain identifying information about their beneficial owners and company applicants. A beneficial owner includes any individual who, directly or indirectly, either exercises substantial control over the reporting entity or who owns or controls 25% or more of the ownership interests of the reporting entity.
A new company formed on or after January 1, 2024 or that first registers to do business in a U.S. state on or after this date must file initial reports with FinCEN within 90 calendar days of its formation or registration date.
The report requires impacted businesses to report the following identifying information:
Full company name and trade name (if applicable)
Street address of the company’s principal place of business in the United States or primary location where the company conducts business in the United States
Name, date of birth and address for each individual who is a beneficial owner of the company or who is the company applicant (the individual who files or controls the filing of the document that creates a domestic entity or first registers a foreign entity)
Taxpayer identification number
Jurisdiction of formation or foreign business registration
Entities in existence or registered as a foreign entity on January 1, 2024 must file an initial report by January 1, 2025. The new reporting requirement affects nearly all LLCs, including those formed for estate planning purposes. Entities that are exempt from the reporting obligations include public companies, banks, insurance companies, tax-exempt organizations, accounting firms and public utilities, among others.
How to Report
The way to submit a report is through FinCEN’s e-filing system. Some clients may not have a grasp of all entities that need to file a report. For example, if you have any interest in a closely held entity or you exert significant control over an entity as an officer, director, manager, etc., then you may be subject to the new reporting regulation. If you need help with filing or identifying entities formed in the past – either through Kanner Baker, on your own or through another firm – we can assist you if you specifically engage us to do so. Please reach out to us with any questions or if you think you need help.