A recent Business Journal article discusses a new rule by the Treasury Department that will require small-business owners to report beneficial ownership information or face potential fines. The regulation aims to combat fraud, money laundering, and terrorist funding through anonymous business entities. Companies formed after January 1, 2024, will have 30 days to file the required information, while existing companies must start filing from January 1, 2025. Violations of the rule could lead to penalties of up to $10,000 and imprisonment for egregious abuses.
Experts recommend that small-business owners develop a process to identify their beneficial owners and collect the necessary information to prepare for compliance. They should also establish a mechanism for updating the information when it changes and designate a point person for compliance. Encouraging owners to apply for a FinCEN identifier, a unique identifying number, can streamline the process. The ownership information will remain private and accessible only for investigative purposes.
While the rule will impact millions of businesses, the time and paperwork required for each business is relatively minimal.