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New Reporting Rule for Small Businesses

A new rule for small businesses starting this year might apply to you. The Financial Crimes Enforcement Network, or FinCEN, has issued new guidance on how to comply with the Beneficial Ownership Information Reporting Rule. The rule requires small businesses to report certain information to the federal government, such as details on the business owners and certain individuals associated with the company.

The change is thanks to the 2021 Corporate Transparency Act, which was passed due to increased scrutiny on how LLCs and other entities that can be created anonymously earn billions in profits without any meaningful oversight by any federal agency. This is why the reporting requirements are focused on getting the names and information of all people who financially benefit from a given company.

While deadlines vary depending on your situation, the nearest potential deadline is for reporting companies created or registered on or after January 1, 2024: if you started your business this year and are required to report, you have 90 days from your start date to submit the Beneficial Ownership Information. Failing to report on time can result in civil or criminal penalties for your company, as well as fines for individuals who willfully violate the rule.

To see if your business is required to report under these new rules and learn what information you’ll need to submit, read this guide from Brooklyn A. Still have questions? Reach out to Brooklyn A at (718) 487-2300 or [email protected] and ask to speak with the Community & Economic Development team.

This guide was written by Brooklyn A Staff Attorney Harrison Green.

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