Your Business’s Beneficial Ownership Information Report Due January 1, 2025

For most small businesses, the deadline to file the Beneficial Ownership Information Report with the Department of the Treasury is January 1, 2025, in order to comply with the Corporate Transparency Act (CTA). The CTA exists to reduce, or even extinguish, illicit financial activity.

The Act went into effect on January 1, 2024, but only companies created or registered to do business in the US before January 1, 2024, have until January 1, 2025, to file initial reports.

Companies created or registered in 2024, however, have 90 days to file once the registration takes effect.

Anyone refusing to report may be subject to civil penalties of up to $591 per day. They may also face criminal penalties of up to two years imprisonment and a fine of up to $10,000.

According to Secretary of the Treasury Janet L. Yellen, “The launch of the United States’ beneficial ownership registry marks a historic step forward to protect our economic and national security. Corporate anonymity enables money laundering, drug trafficking, terrorism, and corruption. It harms American citizens and puts law-abiding small businesses at a disadvantage. Having a centralized database of beneficial ownership information will eliminate critical vulnerabilities in our financial system and allow us to tackle the scourge of illicit finance enabled by opaque corporate structures.”

Ultimately, the CTA creates additional transparency in business ownership. This act now requires all reporting companies (which are defined as privately held companies, both domestic and foreign, registered to conduct business in the US) to provide beneficial ownership information with the Financial Crimes Enforcement Network (FinCEN).

A beneficial owner is defined as any individual who owns or controls at least 25% of an organization, or exercises substantial control, directly or indirectly, as:

  • a senior officer (president, CEO, or general counsel).
  • a point of authority to appoint or remove senior officers, board members, or those within similar roles.
  • one who make important decisions regarding the organization’s business, finances, or structures.

Eligible small businesses should be prepared to report their full legal company name, business address, state or jurisdiction where first formed or registered, and taxpayer identification number (plus qualifying identity documents). The beneficial owners will need to be prepared to share their full legal name at birth, home address, and a copy of their US driver’s license or passport.

Much of this same information might be required by the business’s financial institution, in order to gain protection from being used for illegal activities.

Please note: some organizations quality for an exemption. This includes large companies with more than 20 full-time employees in the US and $5 million in gross sales receipts from US-based sources, inactive entities (since before 2020), some non-profits, and small businesses that are members of the National Small Business Association (NSBA).

If you’re already a Navigator Truck Insurance client, you have access, through Waypoint, to our team of dedicated, knowledgeable professionals. Please reach out through the Ask Anything feature, and let us help light your way through these scenarios.

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