Accavallo & Company, LLC

Business Awareness on the Beneficial Ownership Information (BOI) Filing Requirement Under the Corporate Transparency Act: A Summary for Business Owners

The depth of financial reporting for small business owners is on the brink of change, as the Beneficial Ownership Information (BOI) filing requirement is set to take effect on January 1, 2024. Enacted through the Corporate Transparency Act and finalized by the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), this regulation aims to establish a comprehensive beneficial ownership registry for U.S. legal entities. As a business owner, it is crucial to understand the key aspects of this development to ensure compliance and a smooth transition.

 Understanding Beneficial Ownership Information

Beneficial ownership information involves the identification of individuals who directly or indirectly own or control a company. The Corporate Transparency Act was enacted to address concerns related to illicit activities facilitated by opaque ownership structures, emphasizing the need for a robust reporting mechanism.

Who Needs to Report:

Companies such as LLCs, S-Corps, and C Corps are required to file a BOI report.

Sole proprietorships and most general partnerships are exempt.

When and How to File:

The filing window is from January 1, 2024, to January 1, 2025, with exceptions for entities created after January 1, 2024.

Electronic submission through FinCEN’s website is mandatory, with no associated fees.

The form for reporting BOI information will be available on FinCEN’s website.

What to Report:

Essential company details, including legal name, addresses, and taxpayer identification number.

Personally identifiable information for beneficial owners, including names, birthdates, addresses, and identifying numbers from official documents.

Staying Compliant:

Responsibility extends beyond the initial filing. Any changes to information require an updated report within 30 days, and inaccuracies discovered post-filing necessitate a corrected report within the same timeframe.

Exceptions and Exemptions:

While the majority of small businesses might not qualify for exemptions, understanding the twenty-three exemptions allowed by the Corporate Transparency Act is crucial. Entities already heavily regulated, large operating companies meeting specific criteria, and certain inactive entities are among exemptions.

Next Steps for Small Business Owners:

The reporting regime goes into effect on January 1, 2024. The due date for the initial report depends on when the entity was created:

If the company is created on or after January 1, 2024, then the initial report is due within ninety calendar days (updated 11/29/23) of the date the entity is created.

If the company was formed before January 1, 2024, then the initial report is due no later than January 1, 2025.

Penalties:

Companies who willfully provide false information (including a false or fraudulent identifying photograph or document) or neglect to report by the filing deadline can face civil penalties of up to $500 for each day that the violation continues or has not been remedied. In addition, they can be fined up to $10,000 and/or face up to 2 years of imprisonment.

 

As the Treasury Department works on establishing the BOI reporting platform, estimated to cost $82 million for establishment and over $35 million annually for maintenance, small business owners must familiarize themselves with the regulation’s intricacies. Staying informed and proactive will help navigate complexities, avoid penalties, and contribute to the broader goal of fostering financial transparency.

With the impending implementation date of January 1, 2024, small business owners must be proactive in assessing their reporting obligations. Your Team at Accavallo & Company is here to assist in determining eligibility and understanding the filing process. Contact us to ensure a smooth transition into this new era of financial transparency:

Accavallo & Company, LLC/[email protected] /(203) 925-9600

 

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Sherri Fisher is a Tax Manager at Accavallo & Company, LLC.  Sherri has longstanding expertise in Trust and Estate Taxation, Eldercare, and Estate planning. Sherri appreciates the relationships she has built with estate planning attorneys and advisors, to provide a team approach to assisting her clients. Sherri also has seasoned experience in business and individual taxation and is partial to assisting start-ups in developing overall accounting and operating plans.

Prior to joining Accavallo & Company, LLC, Sherri was a manager in a large firm, servicing high net worth trust clients, business, and personal clients. She was also a Partner in a large bookkeeping firm, which specialized in cloud accounting systems for regional and national companies. Sherri led a team in assisting clients to organize their accounting systems.  She is a graduate of Florida Atlantic University with a B.S. degree in Accounting.    

Sherri’s experience includes working with companies and organizations in a variety of industries including:

  • Investment Trusts

  • DAPT and Family Investment Partnerships

  • Estate and Probate Administration

  • E-Commerce

  • Manufacturing

  • Construction

  • Real Estate Investment

  • Marketing and Service-based industries

In addition to her professional accomplishments, Sherri is an Intuit Advanced Pro Advisor, Intuit Future Firm Advisory Board member, member of the Valley WIN Network, and proudly served as past Connecticut Public School liaison for the Yale Tommy Fund for Childhood Cancer. Sherri enjoys time with her family, Cleveland sports, thrifting and gardening.