FinCEN Issues Guide on 2024 Reporting Requirements for Small Businesses

On September 18, 2023, FinCEN issued a compliance guide to help small businesses report beneficial ownership. The guide facilitates the implementation of additional reporting requirements by the Corporate Transparency Act. The Corporate Transparency Act comes from further attempts by FinCEN to reduce and prevent money laundering, tax fraud, or other illegal activities.

The act requires all reporting entities to file a report through the FinCEN website. Reporting entities could include corporations, LLCs, LLPs, and more. Sole proprietorships and general partnerships are generally excluded, along with 23 other exemptions.

Beneficial owners are individuals who directly or indirectly own or control at least 25% of ownership in said reporting company or exercise substantial control over said company. Substantial control includes offices, appointment authority of officers, and people with significant influence over key business decisions. Exceptions include custodians, children, employees acting solely as employees, or persons with future interests through inheritance.

For reporting entities formed or registered before January 1, 2024, their initial report to FinCEN must be sent by January 1, 2025. Otherwise, they must submit their report within 30 days of the registered or formation date. Reporting violations include a civil penalty of up to $500 per day, outstanding up to $10,000 and/or imprisonment of not more than two years. Reporting entities have 90 days to correct errors from filing without being subject to penalties.

You can find more information on compliance guidelines here. For questions about FinCEN filing requirements or other international tax matters, contact our Global Business Services team.