If you operate a registered business and don’t fall under any of the exceptions, you must provide some critical information to the federal government before Dec. 31 to avoid potentially large fines.

This reporting requirement is part of the Corporate Transparency Act. If your business is registered as a corporation, partnership or limited liability company in the United States, you must report beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN),  a part of the U.S. Department of Treasury.

The filing process is simple. Information about filing available online at the website at https://boiefiling.fincen.gov.

Money laundering and other fraudulent activities cost federal, state and local governments vast amounts of money, time and resources. Over the years, banks and other financial institutions have faced increased reporting requirements to identify and stop fraudulent activities.

The Bank Secrecy Act and Anti-Money Laundering Act were enacted to limit such common types of fraud as money laundering. But these laws weren’t enough. The federal government developed the FinCEN to gain a better understanding of who owns businesses and insights into potentially illegal activities.

There are 23 exceptions to those that must file with FinCEN — https://fincen.gov/boi-faqs#C_2]. These exempt entities are primarily in financial and accounting areas, with a few additions like inactive entities. Generally, the filing requirements apply to companies with 20 or fewer employees. The large operating company exemption requires the business to employ more than 20 full-time employees and doesn’t permit consolidation of this employee count across multiple entities.

Filing is simple and quick. There’s no filing fee. But the filing must be completed online at www.fincen.gov/boi. Failing to file or providing false information could result in civil penalties of $500 a day. Businesses have until Dec. 31 to file with the FinCEN.

You could be solicited by so-called FinCEN consultants who offer to handle the filing for you in exchange for a fee. There’s no requirement or need to use outside services. Unfortunately, whenever the federal government imposes a filing requirement, there are always people who try to profit from inexperience.

One of the aspects of the FinCEN filing is providing BOI.
A beneficial owner is an individual who owns, directly or indirectly, a quarter or more of the company. Ownership includes equity, options, voting rights, capital or profit interest and control of convertible instruments. BOI also applies to anyone who exercises substantial control over a company, even if they own a smaller share than the 25 percent threshold.

Sole proprietors or entrepreneurs who aren’t registered with the Colorado Secretary of State and are 100 percent owners don’t have to file with the FinCEN.

If your business was established in 2024, you must also disclose additional information to FinCEN about the person who made the registration application. There are no annual filing requirements once an initial report is made, but FinCEN must be updated whenever there’s a change in beneficial ownership.