As an Amazon 3rd party seller, running your business through an LLC or other business entity offers numerous benefits, including liability protection and tax advantages. However, starting January 1, 2024, new rules under the Corporate Transparency Act (CTA) will require most business entities—including those used by Amazon sellers—to file Beneficial Ownership Information (BOI) with the Financial Crimes Enforcement Network (FinCEN). This new requirement is part of a federal effort to increase transparency and combat illegal financial activities, and it’s important to understand how these rules apply to your Amazon business. Here’s what you need to know.
What Is BOI Reporting?
BOI reporting requires LLCs, corporations, and similar business entities to provide details about their beneficial owners to FinCEN. Beneficial owners are individuals who:
- Directly or indirectly own 25% or more of the company, or
- Have substantial control over the company.
For Amazon sellers, if you’ve set up your business as an LLC or corporation, chances are you’ll need to comply with this requirement.
What Information Needs to Be Filed?
For each beneficial owner, you will need to report the following information:
- Full legal name
- Date of birth
- Residential address
- A government-issued identification number, such as one from a passport or driver’s license
This information will be collected by FinCEN and stored in a confidential database accessible only to law enforcement and authorized regulators.
Does This Apply to Your Amazon Business?
If your Amazon business operates through an LLC or corporation, you are most likely required to file a BOI report. However, certain entities are exempt, such as:
- Companies with more than 20 full-time employees
- Entities with over $5 million in annual revenue
- Entities with a physical U.S. office
Most small and medium-sized Amazon sellers won’t meet these exemption thresholds, so you’ll need to follow the BOI filing rules.
Key Deadlines for Filing
The deadlines for BOI filing depend on when your LLC or corporation was formed:
- If your business was formed before January 1, 2024, you have until January 1, 2025 to file.
- If your entity is formed on or after January 1, 2024, you must file within 30 days of forming your business.
If any changes in ownership or control occur (such as adding a new partner), you must update your BOI filing within 30 days of the change.
Penalties for Non-Compliance
Failing to comply with BOI filing requirements can result in:
- Civil penalties of up to $500 per day for late filings
- Criminal penalties, including substantial fines and even potential imprisonment for willful non-compliance
Amazon sellers focused on growing their business should ensure they meet the deadlines and avoid these serious penalties.
Why Is BOI Reporting Required?
The goal of these new reporting rules is to prevent illicit activities like money laundering, tax evasion, and fraud. By requiring companies to disclose their beneficial owners, FinCEN aims to create more transparency and accountability in U.S. business practices.
Steps to Take Now
If you’re an Amazon 3rd party seller, here’s what you should do to stay compliant:
- Identify Your Beneficial Owners: For many Amazon sellers, this will be a straightforward task, especially if you are the sole owner of your LLC. However, if you have partners or other controlling parties, gather the necessary information for each person.
- Prepare for Filing: Make sure to organize the required details and be ready to file your report within the specified deadlines.
- Stay Informed: These rules are new, and further clarifications or updates may emerge. Keep an eye out for any changes that may impact your business.
While BOI reporting might seem like an additional administrative burden, staying compliant is essential to keeping your Amazon business running smoothly. By taking a proactive approach and filing on time, you can avoid penalties and ensure that your business operations remain uninterrupted. If you have questions about how BOI reporting affects your specific situation, schedule a consult here https://shorturl.at/0ghod