At Blair Hall Advisors, we appreciate the complexities and challenges that come with managing and complying with regulatory changes. Recently, a significant update has emerged that affects many small business and real estate owners: the requirement to register beneficial ownership with the U.S. Treasury.
Who is Affected?
If you're a significant beneficial owner of a small U.S. business, including those formed for real estate purposes, this update is pertinent to you. The U.S. Treasury has introduced this requirement to enhance transparency and combat the misuse of shell companies for illicit activities. This initiative is not (we are told) focused on tax compliance but aims to strengthen the overall financial system's integrity. Companies created or registered before 2024 have until January 1, 2025, to comply with the requirement—while newer firms have a more accelerated timeline.
Understanding the Requirement
The mandate requires certain small business entities, such as LLCs—even those owning solely real estate—to register their beneficial ownership information with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN). This step is designed to provide crucial information to regulatory and law enforcement agencies, thereby preventing criminal abuse of anonymous entities.
Compliance Guidance
The U.S. Treasury has provided detailed guidance, making the registration process accessible and straightforward. For comprehensive "how-to" information, including definitions and procedural steps, FinCEN’s “FAQ” guide is an invaluable resource. It offers clear, user-friendly instructions tailored for small business compliance. You can access the guide directly through the FinCEN website or here: https://www.fincen.gov/boi-faqs.
Including Information from Others
The easiest way to provide information about another control person is to have them apply for a FinCEN ID number. This takes only a few minutes, and the number is issued almost immediately. Here are the instructions to get a number: https://fincenid.fincen.gov/assets/helpContent/FinCEN-ID-Step-By-Step-Instructions-20240104.pdf. The same number should be used for that person for all entities where he or she may be a beneficial owner. Entering the number on a report for an entity is much faster than entering all the personal information and uploading a copy of a driver’s license or passport.
Why This Matters
It's important to note that some professionals, including CPAs, might view this requirement as outside their scope of expertise, citing its non-tax-related nature. However, understanding and adhering to this requirement is crucial for legal compliance and protecting your business from potential legal scrutiny or penalties.
Educational Guidance
We offer these insights as educational guidance only, as we are not regulated to provide legal advice on the U.S. Treasury guidelines. If the guidelines are confusing to you, we ask that you confer with your business attorney. Our intent is to ensure you are informed about these significant changes that could impact your business operations.
In Closing...
Blair Hall Advisors always welcomes your thoughts and questions—especially about your journey towards further financial success or other financial queries you might have. To start a meaningful conversation, feel free to contact us. We’re here to listen and guide.
Note: Copyright, Blair Hall Advisors, LLC. No reproduction or distribution in whole or in part is allowed without our written permission.