FINCEN Reporting Requirements for Small Business Owners

If you’re a small business owner, especially if your business holds property like a rental home, there’s a new federal law you need to be aware of. This article will walk you through the FINCEN reporting requirements and help you understand the next steps to comply with this law.

Counsel for Small Business Owners

Many of my clients own small businesses, some of which hold properties used as rentals. A rental can be a great source of income if managed well. I recommend placing your rental property in an LLC to limit liability in case of accidents. If you’d like to discuss your options, feel free to reach out.

What is the New FINCEN Reporting Law?

FINCEN (the U.S. Financial Crimes Enforcement Network) now requires small businesses with fewer than 20 employees to file a report that discloses the identities of all individuals in control of the business, as well as any members with over 25% ownership.

This law is intended to prevent tax evasion and money laundering by making business ownership more transparent to the government and financial institutions.

What Are the Consequences of Not Filing?

Failure to file could result in civil penalties up to $5,000 per violation, and criminal penalties could include additional fines and up to 5 years in prison. While immediate prison sentences are unlikely for non-compliance, fines are a real possibility.

Filing Deadlines

• Businesses created before January 1, 2024: File by December 31, 2024.

• Businesses created in 2024: File within 90 days of formation.

• Businesses created on or after January 1, 2025: File within 30 days of formation.

Can I File on My Own?

Yes, you can file your report directly through FINCEN’s official portal at https://boiefiling.fincen.gov. Be cautious of third-party companies that charge fees for filing; some may be scams.

If you need assistance, I can recommend a reputable provider in Utah who charges a reasonable fee for help with the filing process.

What Information Will I Need?

• Official business name and any DBAs

• Business tax ID number

• Names, addresses, and birth dates of owners

• A photo ID of each owner (driver’s license or passport)

How Long Will It Take?

The initial report should take about 10 minutes to complete. It’s a small time investment that can prevent significant legal and financial issues down the road.

Is This Really That Important?

Yes, it is. This law aims to improve transparency and deter financial crimes. Ensuring compliance is crucial to avoid fines and potential penalties.

For questions or further assistance, feel free to reach out. Compliance may seem complex, but it’s essential for protecting your business and staying within the law.