In 2021, Congress enacted the Corporate Transparency Act. This new law aims to help law enforcement prevent, identify, and combat financial crimes. Under the CTA, most businesses are required to file a report with the Financial Crimes Enforcement Network (FinCEN).
Beginning on January 1, 2024, most companies in the United States will have to report information about their beneficial owners, i.e., the individuals who ultimately own or control the company. This information must be reported to FinCEN, a bureau of the U.S. Department of the Treasury.
Companies required to report Beneficial Owner Information (BOI) to FinCEN are called reporting companies. There are two types of reporting companies:
There are a few businesses that are exempt from filing a BOI report. The majority of exemptions are for businesses that are frequently subject to substantial federal or state regulation or large operating companies.
If your business is NOT an LLC, Corporation, or an entity created by filing a document with the Secretary of State - you may be exempt. Other exemptions include businesses with more than $5 million in gross receipts and at least 20 employees. See if your business is exempt from the BOI Reporting Rule.
If your business is a reporting company, your next step is to identify its beneficial owners. A beneficial owner is any individual who, directly or indirectly:
An individual exercises substantial control over a reporting company if the individual meets any of four general criteria:
A reporting company can have multiple beneficial owners.
For example, a reporting company could have one beneficial owner who exercises substantial control over the reporting company, and a few other beneficial owners who own or control at least 25 percent of the ownership interests of the reporting company.
A Reporting Company must report the followings information for each of its beneficial owners:
BOI Reports must be filed by reporting companies within 90 Days of the company's formation. If the reporting company already exists as of January 1, 2024, it must file its initial BOI report by January 1, 2025. We can file your BOI Report for you to ensure you don't miss your deadline.
Failure to comply with this new law can result in civil and criminal penalties. Penalties can include fines of up to $500 per day that the violation continues, criminal penalties of up to two years of imprisonment, and a fine of up to $10,000. There are a few businesses that are exempt from filing a BOI report. See if your business is exempt from the BOI Reporting Rule.
Information filed with FinCEN under the Corporate Transparency Act is confidential and is not disclosed to the public. Law enforcement can access this information to investigate potential financial crimes.