New Beneficial Ownership Reporting Requirements for LLCs Effective January 1, 2024

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The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) recently announced new reporting requirements for Limited Liability Corporations (LLCs). The new reporting requirements require LLCs to report beneficial ownership information to the FinCEN. This new reporting requirement took effect on January 1, 2024.

What Does “Beneficial Ownership” Mean?

Beneficial ownership refers to the individuals who ultimately own or control a business. Beneficial ownership can include those individuals who own a significant percentage of the company (usually 25% or more) or those who exercise control over significant decisions, even if they are not included in the company’s official records.

Here is a breakdown of some of the essential things business owners need to know about the FinCEN’s announcement.

What Businesses Need to Know

Who Needs to File

Most LLCs, corporations, and similar business structures will need to file a beneficial ownership report with FinCEN. Some exceptions exist, such as publicly traded companies or certain inactive businesses.

What Needs to Be Reported

The report needs to include details about the beneficial owners, such as:

  • Full legal name

  • Date of birth

  • Address

  • Social Security number (if applicable)

  • Driver’s license number (or other identification)

  • Nature and percentage of ownership interest

When to File

The deadline for filing the initial report depends on when your LLC was formed:

  • For LLCs formed before January 1, 2024: You have until have until January 1, 2025, to file your initial report.

  • For LLCs formed between January 1, 2024, and January 1, 2025: You need to file within 90 days of formation.

  • For LLCs formed on or after January 1, 2025: The filing deadline is 30 days after formation.

  • Additionally, any changes to the beneficial ownership information need to be reported to FinCEN within 30 days.

What Happens If You Don’t File

Failing to file a report or filing inaccurate information could result in penalties, including fines of up to $500 per day, up to $10,000 per filing, or even potential criminal liability.

What’s Next

The new beneficial ownership requirements took effect as of January 1, 2024. Work with your business advisory professional to understand how these new requirements affect you to ensure that you are in compliance and avoid any potential penalties.

Questions

Have questions about the FinCEN’s newest requirements or if they affect your business? Our team of business advisory experts is here to help. Contact Us.

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