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Disclosure of Beneficial Owners of Limited Liability Companies: Senate Bill S8439B


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In the intricate web of corporate governance and financial accountability, Senate Bill S8439B has emerged as a pivotal piece of legislation during the 2021-2022 New York Legislative Session (New York State Senate, 2021). Championed by Senator Hoylman, this bill endeavors to reshape the landscape of business transparency by mandating the disclosure of beneficial owners of limited liability companies (LLCs). In this comprehensive exploration, we dive deeper into the provisions and implications of this transformative legislation.


 
 

Key Takeaways


- Senate Bill S8439B seeks to revolutionize corporate transparency through the disclosure of beneficial owners.

- Beneficial ownership disclosure mandates the submission of comprehensive personal information.

- Certain categories of entities are exempted from the disclosure requirements.

- Strict compliance is crucial to avoid penalties and maintain business integrity.

- Striking the right balance between privacy and transparency is a key challenge posed by the legislation.

-Keep your books clean.


 


Purpose of the Bill


The central tenet of Senate Bill S8439B is the modernization of disclosure laws concerning LLCs. Its core purpose is to bring about a fundamental shift in the realm of corporate transparency by necessitating the disclosure of beneficial owners. By doing so, the bill aims to foster an environment of openness and accountability in the operation of LLCs.



Defining Beneficial Ownership

At the heart of this legislation is a clear and precise definition of "beneficial owner." The bill establishes that a beneficial owner is an individual who holds a membership interest in an LLC, wields substantial control over the decisions of the LLC, or has been assigned a membership interest. Importantly, this definition casts a wide net, encompassing both direct and indirect forms of beneficial ownership, such as those channeled through trusts and intermediaries.


Exemptions and Exceptions

Recognizing the need to balance transparency with individual privacy rights, Senate Bill S8439B includes provisions for exemptions. Entities such as banks, credit unions, brokers, investment advisors, venture capital fundraisers, insurance companies, accounting firms, public utilities, tax-exempt entities, large operating companies, and inactive entities are among the categories exempted from the disclosure requirements.


Beneficial Owner Information

The cornerstone of the legislation is the requirement for LLCs in New York to furnish a "beneficial ownership disclosure" within their articles of organization. Similarly, foreign LLCs operating in the state must include this disclosure within their application for authority to conduct business. The disclosure mandates the provision of crucial details about each beneficial owner, including their full legal name, date of birth, current business street address, and identifying number from a passport, driver's license, or government-issued ID.



Reporting Changes

A proactive approach to change is vital under this legislation. LLCs are obligated to promptly amend their articles of organization in response to any alterations in beneficial ownership information. This requirement extends to foreign LLCs operating in New York, ensuring that the state is kept informed about changes in ownership structures.


Compliance and Penalties

Compliance with the legislation's provisions is not merely recommended; it is essential. Failure to report the required beneficial owner information will result in penalties. Information not reported within the specified timelines will be marked as "past due" in Department of State records. For instances of prolonged non-compliance, where information remains unreported for two years or more, LLCs will be categorized as "delinquent," and a penalty of $250 must be paid to regain compliant status.


Privacy vs. Transparency

One of the most critical debates arising from Senate Bill S8439B is the delicate balance between privacy and transparency. While combating illegal activities like money laundering and tax evasion is a paramount concern, the bill also grapples with the need to protect sensitive personal information. Striking the right balance is imperative to prevent cyberattacks and unauthorized access to critical data.



What You Can Do

  • Ensure you are owning and operating a legitimate business in a business manner per the IRS ruling (IRS, 2020)

  • Ensure that your LLC is 100% formed properly. It’s important to take caution with those “I’ll File it for you” schemes. Too often, our clients come from those places that claim to have handled all of the paperwork, and now the client is at risk and being audited. Most of those businesses do not have a legal department and are unable to advise you if they make mistakes.

  • Keep your books 100% clean and up to date. You should keep at least 4 separate copies of your books. Docs should be kept on file for at least 7-10 years minimum (Read "Financially Fit")

Additional Resources


All this might feel overwhelming but don’t worry. Your business can and will be protected as long as you are ensuring proper measures have been taken and you are keeping everything current.


Senate Bill S8439B marks a significant milestone in the pursuit of transparency and accountability within the business world. By mandating the disclosure of beneficial owners, it endeavors to not only curb illicit activities but also respect the privacy rights of individuals. Business owners are strongly advised to stay well-informed about these transformative changes, maintain meticulous documentation, and ensure unwavering compliance with the new regulations to safeguard the legitimacy of their enterprises.


For the complete text of Senate Bill S8439B, please refer to the official document.


 

Are you ready to ensure your business's security and credibility?


At Intenovate Inc, we're not just consultants; we're your dedicated partner in ensuring compliance with the disclosure of beneficial owners, especially in the context of Senate Bill S8439B. We understand the complexities involved in this regulatory landscape, and our tailored solutions are designed to make compliance seamless for your business. With our expertise, proactive approach, and commitment to safeguarding your privacy, we're here to empower your business's success while navigating the evolving regulatory terrain. Join us on the path to compliance and triumph; let's make success inevitable.



 

Disclosure:

The insights and recommendations provided in this series are based on extensive research and experience. However, every business is unique, and outcomes can vary. For a more personalized approach, consider reaching out to our team and the appropriate authority relevant to your needs.


For those who prefer auditory learning or have accessibility needs, we're pleased to offer an audio version of this article. At Intenovate Inc., we believe in inclusivity and making knowledge accessible for everyone.

 

Sources:


  1. Internal Revenue Service. (2020). Earning side income: Is it a hobby or a business? IRS Tax Tip 2020-108. Retrieved from https://www.irs.gov/newsroom/earning-side-income-is-it-a-hobby-or-a-business

  2. New York State Senate. (2021). Senate Bill S8439B. https://legislation.nysenate.gov/pdf/bills/2021/S8439B


 


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About the Author:

Paradise Rodriguez-Bordeaux

Founder/CEO

Intenovate™ Inc. , A Paradise Company™

Best-selling author, entrepreneur, and thought leader.


Paradise Rodríguez-Bordeaux, recipient of the 2018 Woman of Strength and 2022 Human Rights Activist awards, firmly believes, "Sustainability is the bare minimum." Spearheading initiatives that prioritize sustainable business growth and innovation, Paradise’s leadership at Intenovate™ has been instrumental in guiding the company and its clients toward understanding and solidifying their foundational strengths before embarking on expansion. In the language of being #IntentionallyInnovative, Paradise has positioned Intenovate™ to be a sound asset for clients; leveraging strategic solutions for sustainable profitability.


Beyond her corporate endeavors, Paradise is a passionate advocate for those who have faced adversity and discrimination. With over 15 years as a philanthropist, she supports organizations championing poverty alleviation and human rights. Paradise firmly believes that "We need to consistently produce effectively efficient solutions. This world, the communities, it's all of our responsibility. Leaders HAVE to lead," encapsulating her vision for responsible leadership.





 

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