New business reporting requirement

[Ischgl99]

I know there are some small business owners here, I just came across a reporting regulation the federal government enacted while setting up a new business for me that many of you might not be aware of. The financial crimes division of the treasury (FinCEN) has a regulation that went into effect on January 1 that requires beneficial owners, or those that control the business, to register with the government. Existing businesses opened prior to Jan 1, 2024 have until the end of this year to file, if you open a business this year, you have 90 days to comply, and next year it becomes 30 days.

The fines for this are very steep, so this is not something you want to forget about. There are some exemptions, but it appears to apply to any small business that incorporated, an LLC, or had to register with your state’s Secretary of State when forming your business. A sole proprietor may be exempt from this, but it would be best to clarify that with your attorney.

To find put more info on this, you can go to the agency page doing this, https://www.fincen.gov/boi, or you can google fincen business registration and a bunch of links will come up about this.

 

[Martin W]

This is good to know for small business owners.
An incorporated business or corporation needs an accountant and lawyer for articles of organization, by-laws, resolutions of minutes, officers, directors and shareholders ledgers, register of ownership, debt obligations, and share certificates. I rely on and trust these people to take care of this type of regulation.
My advice is to have a great accountant, and a good lawyer. They are the ones who are aware of any new regulations.
Here in Canada, we have the BDC, Business Development Bank of Canada. They are a full resource of information regarding government grants, laws or any business matter.
Martin

 

[vtcnc]

This is helpful information for hobbyists and small business owners. I ask that members who reply to this thread remember our no politics rule. The temptation to drag politics into anything resembling this topic is high, resist the temptation.

 

[Ischgl99]

Thank you @vtcnc, I hesitated posting this because of the potential political rabbit hole this can fall into, but thought it was important to get this out there. I do my own accounting since my business is simple enough I haven't needed one before. After coming across this, I might be reconsidering that. I posted this because there are probably others like me that do their own accounting, and the information could slip through the cracks even if you do have a good accountant, ie email going to spam, letter lost in the mail, etc. At $500 per day in fines, this is not something I would want to miss.

This is good to know for small business owners.
An incorporated business or corporation needs an accountant and lawyer for articles of organization, by-laws, resolutions of minutes, officers, directors and shareholders ledgers, register of ownership, debt obligations, and share certificates. I rely on and trust these people to take care of this type of regulation.
My advice is to have a great accountant, and a good lawyer. They are the ones who are aware of any new regulations.
Here in Canada, we have the BDC, Business Development Bank of Canada. They are a full resource of information regarding government grants, laws or any business matter.
Martin

Here in the States, you can open an LLC without needing an accountant or lawyer. When I opened my first business, I went to a good friend of mine who is an accountant to form the LLC, he said you can pay me $300 to fill in the paperwork, or you can spend 15 minutes on the state website and do it yourself, it was that simple to do. My lawyer said the same thing. However, if you do use an accountant, hopefully they are staying current and do let you know about this.

 

[vtcnc]

Thank you @vtcnc, I hesitated posting this because of the potential political rabbit hole this can fall into, but thought it was important to get this out there. I do my own accounting since my business is simple enough I haven't needed one before. After coming across this, I might be reconsidering that. I posted this because there are probably others like me that do their own accounting, and the information could slip through the cracks even if you do have a good accountant, ie email going to spam, letter lost in the mail, etc. At $500 per day in fines, this is not something I would want to miss.


Here in the States, you can open an LLC without needing an accountant or lawyer. When I opened my first business, I went to a good friend of mine who is an accountant to form the LLC, he said you can pay me $300 to fill in the paperwork, or you can spend 15 minutes on the state website and do it yourself, it was that simple to do. My lawyer said the same thing. However, if you do use an accountant, hopefully they are staying current and do let you know about this.

I had to re-read the FinCen notices a couple of times to get it - wasn't exactly sure what they were getting at for the reasoning behind this.

Aside for the reasoning why, it's pretty straight forward to register.

 

[Ischgl99]

I had to re-read the FinCen notices a couple of times to get it - wasn't exactly sure what they were getting at for the reasoning behind this.

Aside for the reasoning why, it's pretty straight forward to register.

Me too. What caught my attention was the high fines and possibly prison time if you don’t register. It does look easy to do, and doesn’t cost anything, so at least it has a positive.

 

[NCjeeper]

Thanks for the heads up.

 

[Smithdoor]

I glad I am retired now.
Now for companies on Ebay having more red tape

If planning on being in business try think fields work and use a contract where you are the employee.
Less hassles from government.

Dave

 

[Provincial]

I think the idea behind the large fines is to discourage the use of "fake" companies to hide the flow of illicit money. Unfortunately, many small business people will not learn of this, or not understand that they must comply, especially those first starting out or on the edge of financial failure.

Including penalties for outside contractors who file the organizational paperwork seems to be intended to counter using attorney/client privilege to hide the real owners.

 

[Ischgl99]

Unfortunately, many small business people will not learn of this, or not understand that they must comply, especially those first starting out or on the edge of financial failure.

That’s exactly why I posted about it. I have a photography business and just started another side business last week and I did not get any notification from the state, nor was there any note that I could find when I registered the new business last week about this. I’m not annoyed the government is requiring this, I am annoyed they are not doing anything to notify business owners of this. $500 per day fines could bankrupt a lot of small companies.