New law impacts local business

Aimed at curbing illegal finance, a new law requires many companies in the United States to report information about the individuals who ultimately own or control the company to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.
Beneficial ownership information (BOI) only needs to be submitted once, unless a company needs to update or correct information, and there is no cost to submit the report.

Beginning in January of this year, companies need to report information about its beneficial owners by January 1 of 2025 if it is:
• a corporation, a limited liability company (LLC), or was otherwise created in the United States by filing a document with a secretary of state or any similar office under the law of a state or Indian tribe; or
• a foreign company and was registered to do business in any U.S. state or Indian tribe by such a filing.

Exemptions
Twenty-three types of entities, including nonprofit organizations, are exempt from beneficial ownership information reporting requirements:
1 Securities reporting issuer;
2 Governmental authority;
3 Bank;
4 Credit union;
5 Depository institution holding company;
6 Money services business;
7 Broker or dealer in securities;
8 Securities exchange or clearing agency;
9 Other Exchange Act registered entity;
10 Investment company or investment adviser;
11 Venture capital fund adviser;
12 Insurance company;
13 State-licensed insurance producer;
14 Commodity Exchange Act registered entity;
15 Accounting firm;
16 Public utility;
17 Financial market utility;
18 Pooled investment vehicle;
19 Tax-exempt entity;
20 Entity assisting a tax-exempt entity;
21 Large operating company;
22 Subsidiary of certain exempt entities;
23 Inactive entity.

How to file this free report
There can be multiple beneficial owners of a company, as a beneficial owner is identified as any individual who, directly or indirectly, exercises substantial control over a reporting company or owns or controls at least 25 percent of the ownership interests of the reporting company.
If your company existed prior to January 1, 2024, it must file its initial BOI report by January 1, 2025.
If your company was newly created or registered in 2024, you must report BOI within 90 calendar days after receiving actual or public notice that your company’s creation or registration is effective, whichever is earlier.
If your company is created or registered on or after January 1, 2025, you must file BOI within 30 calendar days after receiving actual or public notice that its creation or registration is effective.
Beneficial ownership information is reported electronically through FinCEN’s website: www.fincen.gov/boi or by going directly to the E-Filing website: https://boiefiling.fincen.gov and selecting “File BOIR.” The system provides a confirmation of receipt once a completed report is filed with FinCEN.

Penalties
As outlined in the Corporate Transparency Act, the willful failure to report complete or updated beneficial ownership information to FinCEN, or the willful provision of or attempt to provide false or fraudulent beneficial ownership information may result in a civil or criminal penalties. Civil penalties of up to $500 for each day that the violation continues, or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000 can be imposed.
Senior officers of an entity that fail to file a required BOI report may be held accountable for that failure.
Additionally, a person may be subject to civil and/or criminal penalties for willfully causing a company not to file a required BOI report or to report incomplete or false beneficial ownership information to FinCEN.

The Iowa Small Business Development Center (SMDC) can help answer questions about this new requirement. Contact Jamie David, Regional Director at 641-782-1483 or by email at David@swcciowa.edu.
More information about this new law enacted by Congress in 2021 can also be found online at: https://fincen.gov/boi/quick-reference