New Federal Law Impacts Up To 900,000 IL Businesses
UPDATE MARCH 1, 2024
The Corporate Transparency Act, which created the “Beneficial Ownership Information (BOI)” reporting obligation we have been talking about, has been declared unconstitutional by a federal court.
However, the US Treasury Department will likely appeal the decision. At this time, any business subject to the BOI reporting rules should continue to comply for now, according to the Treasury Department, unless that business is specifically a member of the National Small Business Association (which was a direct party to the lawsuit).
As a reminder, the BOI reporting requirement applies to many small and medium-sized businesses unless the business meets a specific exemption in the law (like being publicly-traded). Notably, while sole proprietorships are not subject to BOI reporting, LLCs do have to comply with these disclosure requirements. This is because LLCs have to register with the state, making them subject to this law.
February 09, 2024
A new federal law that took effect on January 1, 2024, impacts many Illinois business owners and companies by requiring them to report Beneficial Ownership Information (BOI) to the federal government.
The Corporate Transparency Act (CTA) aims to root out corruption and illicit activities. It will affect up to 900,000 small businesses, corporations, and other domestic and foreign entities, like LLPs or LLCs, that are registered with the Secretary of State’s office.
What it Means:
Under the new requirement, small- to mid-sized businesses must now disclose their beneficial owners (individuals who own or control the company) to the Financial Crimes Enforcement Network (FinCEN), a bureau within the U.S. Treasury Department.
Who Needs to Register?
All domestic and foreign corporations, LLCs and other business entities with fewer than 20 employees in the U.S. and less than $5 million in gross receipts or sales. FinCEN has provided a list of 23 exemptions that apply. Otherwise, if a company was created or is registered to operate in the U.S. by filing documents with the Secretary of State’s office, it must file.
How Do Companies Register?
Businesses will need to file a Beneficial Ownership Information (BOI) Report with the FinCEN. A beneficial owner owns at least 25% of a company or has “substantial control” over it — meaning a senior officer, important decision-maker or someone who can appoint and remove officers.
Deadlines:
The CTA requires businesses formed and registered with the Secretary of State’s Department of Business Services:
1) Before January 1, 2024: to file a BOI report by January 1, 2025.
2) After January 1, 2024 and before January 1, 2025: to file a BOI report within 90 calendar days of creation.
3) On or after January 1, 2025: to file a BOI report within 30 calendar days of creation.
Further Assistance:
• To assist Illinois businesses, the Department of Business Services will mail notices out to all registered businesses about the new requirement throughout the year and provide information to new business owners upon registration.
• The Illinois Secretary of State’s office has also established a partnership with the Illinois Department of Commerce and Economic Opportunity’s (DCEO) Small Business Development Centers (SBDCs) to provide free training and assistance to businesses across the state. To find a SBDC near you, please visit DCEO’s Find a Center website.
• They will also be co-hosting quarterly informational webinars with the U.S. Treasury Department starting in February. We will share more information about these opportunities in the coming weeks
CLICK HERE for an informational one-pager with additional information and FAQs
If you have questions, please reach out to the Director of Business Services, Kimberly Hill, using the contact information below.
Kimberly Hill, Director, Department of Business Services
KHill@ilsos.gov
312-881-0763
