Effective January 1, 2024, via the Corporate Transparency Act, many small and medium-sized businesses are required to file a Beneficial Ownership Information Report. In essence, this report asks the business owner to provide information about the owners of the company, including their name and address, and to include a copy of the owner’s passport, driver’s license or other identification. The information is submitted to the United States Department of Treasury Financial Crimes Enforcement Network (FinCEN) for inclusion in a non-public database accessible to the government and law enforcement, as needed. There are exemptions for certain businesses and certain types of owners.

Different time frames for compliance are set based on the nature of your business. However, if you have a pre-existing business (meaning formed before January 1, 2024), your report must be filed by January 1, 2025. This includes businesses which are not “active” but have not been formally dissolved. Penalties for noncompliance are significant.

There are legal challenges to the federal law pending in various federal district courts across the country. However, the law has not been deemed unconstitutional and is still currently in effect. Additionally, New York State has passed its own version of the Corporate Transparency Act applicable to limited liability companies only. Depending on when the entity was formed, by January 1, 2026 or 2027, LLCs will have to make a similar report to the New York State Department of State.

If you’re reading this and have an entity you believe is covered, you can find the link to the file the report here. If you need assistance, please contact us.