Heads up, CPAs – The Corporate Transparency Act and Beneficial Owner Reporting are not going anywhere. We’ve put together a quick reference guide so you can knock it out of the park with your clients.

As a Certified Public Accountant (CPA), navigating the complexities of regulatory compliance, particularly when it comes to filing the newly instated Beneficial Owner Reports (BORs) for client entities, is essential. With stringent requirements set forth by regulatory bodies like the Financial Crimes Enforcement Network (FinCEN), we understand that accuracy and timeliness are incredibly important to you and your clients.

We’ve assembled a comprehensive guide for CPAs on streamlining the BOR filing process for client entities that we find might be helpful (and potentially even profitable) to you in this first year of reporting.

Understanding Beneficial Owner Reporting:

Originating from the Corporate Transparency Act of 2021 (an act whose aim was to combat the U.S. problem with money laundering), Beneficial Owner Reporting with FinCEN mandates businesses to disclose individuals who own or control a significant stake in an entity.

Domestic entities or foreign reporting entities registered to do business in the United States on or after January 1, 2024 and before January 1, 2025 have 90 days to file, whereas those existing before that date have until December 31, 2024.  Domestic entities or foreign reporting entities registered to do business in the United States on or after January 1, 2025 have 30 days to file.

The legal repercussions for failing to file Beneficial Owner Reports on time can include civil penalties imposed by regulatory authorities, which may amount to significant fines (up to $591/day), imprisonment (up to 2 years), or both, depending on the severity of the offense.

How to File on Behalf of a Client

1. Identify Relevant Entities: Determine which client entities are subject to Beneficial Owner Reporting based on their structure and activities. It is important to note that any entity which your client has at least 25% stake of qualifies – and yes, that includes community property interests of an owner’s spouse.
2. Gather Necessary Information: Collaborate closely with clients to collect comprehensive data on beneficial owners, including their full legal names, addresses, dates of birth, and ownership percentages. You will also need a digital copy of their preferred state issued Driver’s License or Passport ID.
3. Verify Accuracy: Conduct thorough due diligence to ensure the accuracy and completeness of the gathered information. This may involve cross-referencing with official documents and conducting additional inquiries if discrepancies arise.
4. Complete Reporting Forms: Utilize FinCEN’s designated reporting forms, such as FinCEN Form 8300 or FinCEN’s electronic filing system, to submit BORs on behalf of your clients. You’ll want to ensure all required fields are accurately filled out to avoid delays or rejections, and make sure that you keep a record of your confirmed transmission number, just in case you need to go back and revise it in the future.
5. Submit Timely Reports: Adhere to regulatory deadlines for filing BORs to avoid potential penalties or non-compliance issues. Be proactive, reminding your clients of upcoming reporting obligations to facilitate timely submission. If you have a number of clients with existing entities, we strongly recommend you start pushing them as soon as tax season is over, to leave yourself plenty of time to submit them all before the end of 2024.

Ways to Make the Process Easier for Your Clients:

1. Educate Clients: Provide clear guidance to clients on their obligations regarding Beneficial Owner Reporting, including the importance of compliance and potential consequences of non-compliance. We created a quick reference guide located here for you to share as much as you like.
2. Offer Assistance with Data Collection: Assist clients in gathering and organizing necessary information on beneficial owners to streamline the reporting process. Consider developing standardized templates or checklists to facilitate data collection.
3. Implement Technology Solutions: Leverage technology tools and software solutions such as Venture Vault, an API-Connected portal for filing that can be branded specifically for you and your clients.
4. Provide Ongoing Support: Offer ongoing support and guidance to clients throughout the reporting cycle, addressing any questions or concerns they may have. Stay updated on regulatory developments and communicate any changes or updates relevant to BOR filing requirements. Keep in mind that you only have 30 days to submit changes to Beneficial Owner information after changes have occurred.
5. Emphasize Compliance Culture: Foster a culture of compliance within client organizations by emphasizing the importance of regulatory adherence and ethical business practices. Encourage proactive risk management and internal controls to mitigate potential compliance risks.

Conclusion

We know you are busy. As a CPA, Beneficial Owner Reporting for client entities is just another (and, we completely sympathize – potentially annoying) thing to add to your list of to-dos this year. However, we do believe that there are ways to make it less painful (and even profitable.)  You can streamline BOR filing procedures and facilitate regulatory compliance for your clients.