New reporting requirements for LLCs will begin to take effect in 2024 under the Corporate Transparency Act, a federal law aimed at preventing money laundering that was passed in 2021. The penalties for failure to comply with these requirements potentially include a felony conviction, a $500 daily penalty up to $10,000, and up to two years of prison. Ensuring that you comply with the new reporting requirements is essential. 

Under this new law, many small business owners will be required to file a beneficial owner report for their companies’ LLC or corporation with FinCEN (the Department of the Treasury’s Financial Crimes Enforcement Network). FinCEN will keep the information gathered from these reports in a database for authorized government authorities and financial institutions to use to prevent money laundering. The database will not be viewable by the public. 

Who Is Required to File?

This requirement applies to all LLCs or corporations, including single member LLCs, with some exceptions for large publicly-traded companies and businesses that meet all of the following criteria: 1) has more than 20 employees; 2) grosses more than $5 million annually; and 3) maintains a physical presence at a business office in the United States.

If your business is an LLC or corporation, including a single-member LLC, you are required to fill out this form by the end of 2024. If you create a new LLC or corporation in 2024, you must complete the report within 30 days of forming the new LLC or corporation. Any changes to beneficial ownership, name, or address must also be reported within 30 days. However, there is no annual reporting requirement. 

What Information is Required to File?

Companies will need to provide the following information:

  • Its legal name and any trade name or dba;
  • Its address;
  • The jurisdiction in which it was formed; and
  • Its taxpayer identification number.

In addition, the following information will be required for each company’s beneficial owner:

  • Legal name;
  • Date of birth;
  • Address; and
  • An identifying number from a driver’s license, passport or other government-approved document for each individual, as well as an image of the document that the number is from.

This information will also be required for company applicants, meaning individuals seeing to form a new LLC or corporation starting in 2024. 

Lengea will continue to monitor this requirement and is available to answer any questions clients may have. We will provide an update once FinCEN has released the forms that beneficial owners will be required to complete.