For individuals who own and/or operate a business in the United States – new business reporting requirements are being enforced beginning January 1st, 2024. This new informational reporting requirement is referred to as “Beneficial Ownership,” and if you own and/or operate a business in the United States, we encourage you to familiarize yourself with the basics of the new Beneficial Ownership requirements provided in the newsletter below:

Beneficial Ownership – Introduction

Starting in 2024, newly formed entities or those newly registered to do business in the United States will be required to report to the Financial Crimes Enforcement Network  (FinCEN) information about the their beneficial owners — the individuals who ultimately own or control a company. Existing entities will also be subject to this new requirement beginning in 2025. 

Why do companies have to report beneficial ownership information to FinCEN?

In 2021, Congress passed the Corporate Transparency Act. 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.

What information will a company have to report about itself?

  • Its legal name.
  • Any trade names, “doing business as” (d/b/a), or “trading as” (t/a) names.
  • The current street address of its principal place of business if that address is in the United States, or, for companies whose principal place of business is outside the United States, the current address from which the company conducts business in the United States.
  • Its jurisdiction of formation or registration.
  • Its Taxpayer Identification Number – TIN.

Who is a beneficial owner of a company?

A beneficial owner is an individual who either directly or indirectly: exercises substantial control over the reporting company; or owns or controls at least 25% of the company’s ownership interests.

What information will a reporting company have to report about its beneficial owners?

For each individual who is a beneficial owner of a company, a company will have to provide:

  • The individual’s name.
  • Date of birth.
  • Residential address.
  • An identifying number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of identification document. The company will also have to report an image of the identification document used to obtain the individual’s identifying number.

How will I report my company’s beneficial ownership information?

If you are required to report your company’s beneficial ownership information to FinCEN, you will do so electronically through a secure filing system available via FinCEN’s website. This system is currently being developed and will be available before your report must be filed.

When do I need to report my company’s beneficial ownership information to FinCEN?

  • A company created or registered to do business before January 1, 2024, will have until January 1, 2025 to file its initial beneficial ownership information report.
  • A company created or registered on or after January 1, 2024, and before January 1, 2025, will have 90 calendar days after receiving notice of the company’s creation or registration to file its initial Beneficial Ownership report.
  • Companies created or registered on or after January 1, 2025, will have 30 calendar days from actual or public notice that the company’s creation or registration is effective to file their initial Beneficial Ownership report with FinCEN.
  • FinCEN will begin accepting beneficial ownership information reports on January 1, 2024 for those companies required to report in 2024. Beneficial ownership information reports will not be accepted before then.

How can Hughes Szuberla CPAs can help you with your beneficial ownership reporting?

As the CTA is not a part of the tax code, the assessment and application of many of the requirements set forth in the regulations, including but not limited to the determination of beneficial ownership interest, necessitate the need for legal guidance and direction. As such, since we are not attorneys, our firm is not able to provide you with any legal determination as to whether an exemption applies to the nature of your entity or whether legal relationships constitute beneficial ownership.

Please contact us at info@hstaxcpas.com if you have any questions about the new beneficial ownership regulations, or if you require assistance regarding registration with our new portal application. We’re happy to help!

Thank you very much and have a great day!