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Avoid Penalties on Your LLC, Corporation or Other Business Entity

The Law Office of Libby Banks > Uncategorized  > Avoid Penalties on Your LLC, Corporation or Other Business Entity

Avoid Penalties on Your LLC, Corporation or Other Business Entity

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by Libby Banks, The Law Office of Libby Banks, PLLC

We want to alert you to a new law requiring you to provide information about “beneficial owners” of your LLC, corporation or partnership. You must report the beneficial owners of your business in a Beneficial Ownership Information (BOI) report on-line at:  https://www.fincen.gov/boi. More on how to file below.

When do you have to file?

  • A business existing before January 1, 2024, has until January 1, 2025 to file the report.
  • An entity formed in 2024 has 90 days to file.
  • Updated reports are required within 30 days when certain of your information changes.

PENALTIES FOR NON-COMPLIANCE

The penalties for failing to comply are stiff – civil or criminal penalties of up to $500 per day!

Why was this law enacted?

The purpose of this law is to give law enforcement information on people who control companies, to reduce money laundering and other nefarious activities. The law is aimed at small businesses, while big businesses and financial institutions and entities (who have their own reporting requirements) are exempt. The law requires reporting for entities, even as small as an LLC you created for your rental properties.

Who is a beneficial owner?

Who qualifies as a beneficial owner is not always easily determined. You may need to include on your report entities or individuals you would not initially consider “owners.” A married person in a community property state like Arizona needs to report their spouse as a beneficial owner as well, even if they don’t own the company. A manager of your LLC and a corporate officer of a corporation are both beneficial owners, even if they do not own the company, and they must be included in the report.

Getting started on the filing

For do-it-yourself types, start with the FAQs at the FinCEN.gov website or download the Small Entity Compliance Guide here:

https://www.fincen.gov/boi/small-entity-compliance-guide.

These documents answer questions about whether you need to file or are an exempt entity, when you need to file, and who to include as a beneficial owner.

Information needed to file the report

For each beneficial owner, you need a social security number and a copy of their driver’s license or passport, as well as full legal names and dates of birth. The easiest option for this is to have each beneficial owner create their own FinCEN Identification number. Once they have done so, you can file the report and simply identify the other beneficial owners by way of their FinCEN ID. To file the report, go here: https://boiefiling.fincen.gov/

Not a do-it-yourself type?

If you need assistance, contact your business attorney or your CPA or look for online assistance. We have had clients use Morgan Wyatt LLC, found at https://morganwyatt.com/.

Does your estate plan address your business interests?

A complete estate plan will include your business interests or LLCs in some form. If you need an estate plan or want a review and update, call our office at 602-375-6752 and our team can assist you.

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