GECU Voices brings you guidance and insight from experts within the Credit Union. Today’s blog post was penned by Paula Pfaehler, Senior Vice President, Commercial and Small Business Lending.
Understanding federal reporting rules for your business is crucial to ensure compliance with legal obligations and avoid penalties. The recently introduced beneficial ownership reporting requirement has led to many questions among our business members. We created this guide to help you understand the basics of this reporting rule and direct you to more resources.
Answers to your top reporting questions
What is it?
Beneficial ownership information (BOI) simply identifies who owns or controls a company. As of January 2024, the following entities are required to report this information to the Financial Crimes Enforcement Network (FinCEN) under the Corporate Transparency Act:
- U.S. corporations, LLCs, or similar entities with 20 or fewer full-time employees.
- Previously demonstrated $5 million or less in gross receipts or sales on federal income tax returns.
- Consult a business tax professional and review the FinCEN’s list of 23 exempt entities—which includes many nonprofits, select publicly traded companies, and more—to verify if you have a reporting obligation.
Why is it needed?
The Corporate Transparency Act rolled out in 2021 as part of the Anti-Money Laundering Act. The BOI update will give Federal, State, local, and Tribal officials access to a database for uses related to national security and law enforcement. The information contained within this database will not be available to the general public.
What’s the deadline?
You must file a BOI report by January 1, 2025 if your LLC or other entity was created on or after January 1, 2024. If it was created after, you have 90 days from when you’re officially registered with the secretary of state. However, this will reduce to 30 days starting in 2025. At this time, companies will receive a notice to file.
What happens if I don’t report?
Failure to report or update your beneficial ownership information may result in civil or criminal penalties—$500 a day or $10,000 and imprisonment of up to two years—so it’s crucial to confirm your reporting requirements.
As a valued member, our Business Services team is here to help guide you toward the right resources to learn more. Visit the FinCEN website for the most up to date information on the new BOI reporting requirement.
