Wood: Small businesses face new reporting deadline

Owners of LLCs and other small businesses have a pending deadline, but many might be unaware of the requirement.

Congress passed the Corporate Transparency Act on a bipartisan basis in 2021, which requires reporting of beneficial ownership information to a federal agency, FinCEN, the Federal Crimes Enforcement Network, part of the U.S. Treasury Department.

A beneficial owner is defined as someone who controls or directly or indirectly owns a company, with at least 25% ownership interest.

“This law creates a new beneficial ownership information reporting requirement as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures,” according to FinCen’s website.

Businesses established before Jan. 1, 2024, have until Jan. 1, 2025, to file their initial report, known as a Beneficial Ownership Information Report, or BOIR. Companies established in 2024 have 90 days from their business registration becoming effective to file a report. Companies established in 2025 or later will have 30 days to file.

According to FinCEN’s website, the reporting requirement applies to many types of companies, including:

• Domestic reporting companies: corporations, limited liability companies and any other entities created by the filing of a document with a secretary of state or any similar office in the U.S..

• Foreign reporting companies: entities (including corporations and LLCs) formed under the law of a foreign country that have registered to do business in the U.S. by the filing of a document with a secretary of state or any similar office.

Twenty-three types of entities are exempt from reporting, including public companies, governments, banks, credit unions, insurance companies and others.

Filing is free of charge.

Think you can ignore the filing requirement? I’m not sure that I would risk it. The penalty for non-filing is $591 for each day the report is late, and criminal penalties could include up to two years of imprisonment.

BizWest Media is an LLC, so I recently submitted our report. You can choose to upload a pdf of the form, or use the online form. I chose the online form option. Here are a few tips:

• Have a copy of the driver’s licenses for all beneficial owners.

• Have your company’s Employer Identification Number handy.

• If your company was established in 2024 or later, know who submitted your information to the Colorado Secretary of State or other state jurisdiction as appropriate. (You’ll need a copy of their driver’s license.) If formed prior to 2024, just click the “Existing Entity” button to skip the Corporate Applicant section. 

• If you make a mistake after filing, you can go back to correct or update a report.

• Final tip: Be sure to download a transcript of your submission for your records.

Visit www.fincen.gov/boi for detailed information, including a helpful video.

Christopher Wood can be reached at 303-630-1942 or via email at cwood@bizwest.com.

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