The Eclipse of LLC Ownership

We have written often about the importance of circle of trust advisors. And this tax year, our accountant did not disappoint.

Last week our accountant asked if we were familiar with the Financial Crimes Act and the new requirement for LLCs and other smaller firms to file a Beneficial Ownership Information Form. Our resounding answer was No! We had not heard of this requirement. And really no surprise there as the Media focuses on big companies. Rarely do we see much press around sole practitioners, many whom organize their business as an LLC.

Our advisor mentioned that LLCs are difficult to ascertain exact ownership for outside parties, it is eclipsed, shall we say. So, the federal government imposed a Beneficial Ownership Form on most smaller companies, and certainly that includes LLCs. In fact we were advised it was specific to LLCs. The penalties for not completing this form by end of year included a financial penalty of $500 per day and two (2) years in prison! Thank goodness we have a great advisor as we had no knowledge of this and we watch CNBC every business day at work.

The form can be found at fincen.gov. Just search for Beneficial Ownership Information Form. It was not hard to complete but not as simple as one would hope. Our advisor asked us to confirm when we completed it so they had a record. We were also told that there are some online sites who will complete it for you for a fee. But that seemed like a waste of money for us.

As the federal government imposes more requirements on the very smallest of businesses with stiff penalties for noncompliance, do yourself a favor and contact your accounting or legal advisor and ask if this new mandate applies to your business.

Be well.