We’ve been watching the unfolding banking “crisis” closely and evaluating what it means for our economy moving forward.
Yes, seeing (numerous) banks fail can be unnerving, especially when the economy seems to also be careening toward a recession.
The media, of course, is aware of this feeling of unsettledness and is financially motivated to make the most of it. (They are profit-oriented businesses, after all.)
So, it’s easy to get caught up in the swirl and start making decisions about your own financial situation (and your business’s) prematurely … and fearfully.
I encourage you, in times like these, to steady yourself by staying focused on what you can control. Seek out wise counsel and don’t make business decisions based on emotion. That’s one of the reasons we do what we do here … you don’t have to huff it alone in your business.
See, business ownership in 2023 is a lot different than it was for past generations.
Heck, it’s even different from 4 years ago (pre-2020).
And while the basics are much the same, the methods for running your Skagit County business and the demands placed on it economically and legally are ever-evolving. It might feel impossible to stay on top of all those changes, especially if you’re a one- or two-person show.
If it takes a village to raise a child, in our modern world, it’ll take a reliable team around you to raise your business. And the people on your team should be there to help you stay on top of those changes and grow through them. They should be people you trust.
I’d like to think I’ve garnered some trust (managing your private financial details with the IRS and all), and I’m happy to be one of those team members keeping you informed about all things tax. I’d also like to keep you abreast of new reporting requirements the government hands down to your business.
That’s why today’s note is all about some new reporting requirements being handed down by FinCEN. Read it, but if you’d like some face-to-face to discuss it and its effect on your Skagit County business, I’m right here:
New FinCEN Reporting Requirement for Skagit County Businesses
“Information is a negotiator’s greatest weapon.” – Victor Kiam
Business ownership is a vast terrain full of many ups and downs and surprises along the way. Our hope at Padgett & Padgett, PLLC CPA is to be a steady guide and trusted confidant along the way. That’s why we are always on the lookout for the latest changes, opportunities, and regulations that may affect you and your business.
And why I wanted to let you know that starting next January, scads of small businesses will have a new reporting requirement from the Financial Crimes Reporting Network (FinCEN).
The requirement, aimed at curbing criminal financial activity, means that many small companies and corporations will now have to tell the feds who their beneficial owners are. If your business has overseas ownership or connections, you need to know about these new rules.
Because this is so critical, we’ll tackle this in two parts to make sure you’re up to date on the latest info by examining companies’ beneficial ownership information (BOI).
Here’s a glimpse into what we know so far.
About the New FinCEN Reporting Requirement: Being transparent
Last fall, FinCEN published a final rule implementing the BOI reporting requirements related to the Corporate Transparency Act.
The CTA establishes uniform BOI reporting requirements for certain types of corporations, limited liability companies, and other similar entities created in or registered to do business in this country. FinCEN can also collect that information and disclose it to government authorities and financial institutions in America and overseas.
The regulations describe who must file a report, what information must be provided, and when a report is due. These reporting requirements are intended to help prevent and combat money laundering, terrorist financing, corruption, tax fraud, and other crooked doings — especially international ones — “while minimizing,” FinCEN adds, “the burden on reporting companies.”
We’ll see. Certain types of entities are exempt (notably, large companies), but if you’re a small corporation or LLC, you will likely be required to report your BOI unless you fall into the exempt category or your ownership doesn’t ring the beneficial ownership bell.
Reporting Requirement Details: A quick Q&A
If you think this reporting might apply to your company, I can help you make sure. Let’s take a second to address some of the most frequently asked questions:
- Who’s my ‘beneficial owner’? This is any individual who exercises substantial control over your company or who owns or controls at least 25% of your company.
- What do they want to know, anyway? Your company’s legal name and any trade name or DBA; your address; the jurisdiction in which your company was formed or first registered, depending on whether it’s a U.S. or foreign company; and your Taxpayer Identification Number (TIN).
For each of your company’s beneficial owners and each company applicant (if required), your company will need to provide the individual’s legal name and birth date; address (in most cases a home address); and an identifying number from a driver’s license, passport, or other approved document for each individual; as well as an image of the document that the number is from.
- When and how should my company file its initial report? If your company was or is created before January 1, 2024, you’ll have to file by January 1, 2025. Otherwise, file within 30 calendar days of receiving actual or public notice from your state’s secretary of state or similar office that your company was created or registered. FinCEN will accept e-filed reports beginning on January 1.
- Do I have to report my company’s applicants? There can be up to two individuals who can be your company “applicants”: whoever directly files the document that creates or first registers your company, or whoever is primarily responsible for directing or controlling the filing of the relevant document. (Only companies created or registered on or after next January 1 have to report company applicants.)
- What are they going to do with my information? It’s going into a database that FinCEN promises will have cutting-edge security against hackers (a promise critics have looked at with a jaundiced eye). The information will be available to federal, state, local, and Tribal government agencies, including the U.S. Treasury and regulatory agencies, foreign law enforcement and authorities who jump through the right bureaucratic hoops to get a look at it, and financial institutions using BOI to do customer due diligence.
This is just an overview, and next time we’ll dig into some of the details of this new reporting requirement. For now, nobody argues that the financial bad boys should be reined in. But as you can imagine, potentially tens of millions of small businesses will have to comply, and we could be looking at a huge time suck for small businesses.
Of course, I’ll keep you posted. I’m here to help no matter what happens and how your Skagit County business may be affected.
And stay tuned for part two.
Until next time,