US Beneficial Ownership Information Registry Explained

These days, business owners practically need to be mathematicians to figure out their tax reporting and filing requirements.

For example, did you know that the Corporate Transparency Act was passed in 2021 and introduced intense new reporting requirements for business owners? Probably not, since you’re a busy person. But, if you miss the reporting deadlines for this crucial new piece of legislation then you’ll face significant penalties.

Fortunately, I recently sat down with an attorney friend of mine, Mike Abel (who is licensed in 4 states and has 30 years of experience), to learn how to keep your company tax-compliant in the eyes of the US government.

What is the US Beneficial Ownership Information Register?

The newly established U.S. Beneficial Owner Information Registry is the US government’s attempt to cut down on illicit finance (money laundering, drug trafficking, corruption, etc.). It requires businesses to report extensive information on who owns or controls them.

Government organizations and large public companies are exempt from this filing since their ownership is usually public knowledge anyway. So, the filing requirements will largely fall on small businesses, international companies, or entities that only own assets.

What Do You Report?

The first step is to register your business with the registry. You’ll have to submit all relevant information such as:

1. Your company’s name
2. Employer Identification Number
3. Physical address(es) – not a PO box.

But, the government also wants information on who owns, manages, and controls different entities.

So, if you’re a beneficial/natural owner of a company – meaning you own 25% or more – then you’ll need to report your personal information, like:

1. Your legal name?
2. Date of birth
3. Address
4. The identifying number and issuer from either a non-expired U.S. driver’s license, a non-expired U.S. passport, or a non-expired identification document issued by a State.

If the company does not have a natural owner then all managers/directors with a major stake must be reported.?

But, the government doesn’t just care about actual ownership. They also want to know about control of ownership. If you control voting power within the company then you’ll need to report your information, even if you don’t own a major stake in the company.

The government also wants information on who manages the company. So, you’ll need to report anyone with a major management stake, including all c-suite execs (CFO, CEO, CMO) as well as the president and any other prominent managers.

Finally, if you own multiple LLCs – or “layered” LLCs – then you need to file a report for each individual company. When in doubt, give the government too much information – not too little.

What Are the Reporting Deadlines?

If your existing entity was there before January 1st, 2024 then you have until midnight on December 31st, 2025 to file. Pro tip: Do not wait!! Get this done ahead of time.?

If you form a new entity during 2024 then you have 90 days to report that entity. The same goes for if you're making a change to this entity this year (such as adding a director, moving locations, etc). Starting in 2025, this timeline will be reduced to 30 days for both forming new entities and making changes to an entity.

What Happens if I Don’t File? Missing this deadline comes with very harsh consequences.?

The fine for a company forgetting to report one of your managers/owners is $500 per manager per day. Forgot to report a manager? $500 per day. Forgot to report 5 managers? $2,500 per day fine. And, if you forget to file your individual reports then you could face up to $10,000 in criminal fines and even 2 years in jail.

Many people think that this filing requirement may get turned around in court. But, I wouldn’t count on it. I’d strongly recommend getting ahead of this filing before it becomes a larger issue for your company.?

To learn how to do that, please send me a message through LinkedIn or schedule a consultation. Or, listen to the full episode here to learn more about the US beneficial ownership registry.