If your business can be defined as a “reporting company” under the Corporate Transparency Act (CTA), you may need to comply with new beneficial ownership information (BOI) reporting rules that took effect on January 1, 2024. Depending on when your business was (or is) first organized, your due date can be 30 days, 90 days, January 1, 2025, or already passed.
Who Has to Report
The reporting company definition is broad: it includes any corporation, limited liability company or other legal entity created through documents filed with the appropriate state authorities. It also may be any private entity formed in a foreign country that’s properly registered to do business in a U.S. state.
Reporting companies must provide information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. A beneficial owner is defined as someone who, directly or indirectly, exercises substantial control over a reporting company, or who owns or controls at least 25% of its interests. Indirect control is defined generally as someone who is a senior officer or person with authority over senior officers.
There are some exemptions from the reporting rules. The current published list includes 23 types of exempted companies. Categories include: financial institutions, government units, investment advisors/brokers, accounting firms, tax exempt/nonprofit organizations, insurers, public utilities, inactive entities, and “large operating companies”. Large operating companies are defined as those that:
- Employ more than 20 employees on a full-time basis
- Have more than $5 million in gross receipts or sales (not including receipts and sales from foreign sources)
- Physically operate in the United States
These businesses are often complying with other reporting requirements. (Complete list included at end of article).
What to Report
Reporting companies must file online through FinCen (www.boiefiling.fincen.gov) information that includes the entity’s legal name (or any trade or doing-business-as name), address, jurisdiction where the entity was formed and Taxpayer Identification Number (FEIN).
You must determine who is a Beneficial Owner, and report their name, address, date of birth and “unique identifying number information”. A unique identifying number may be a U.S. passport or state driver’s license number. An image of the document containing the identifying number must be included in the filing.
Additionally, the Company Applicant must be disclosed. Company Applicant is defined as someone who is responsible for:
- Filing the documents that created the entity (for a foreign entity, this is the person who directly files the document that first registers the foreign reporting company to conduct business in a U.S. state), or;
- Directing or controlling the filing of the relevant formation or registration document by another individual.
When to File
There are 3 time periods to consider: If your business was in existence prior to 1/1/2024, you have one year to report. Your due date is 1/1/2025.
If your business is newly created in 2024, you have 90 days to report. If you begin a new business after 1/1/2025, you have 30 days to report.
After initially filing, if there is any change to your Beneficial Ownership or Company Applicant, reporting companies have 30 days to file an updated report. In addition, reporting companies must correct inaccurate BOI in previously filed reports within 30 days after the date they become aware of the error.
What Next
Now is the time to determine whether your business is required to file or falls into an exempt category. We suggest consulting with your legal advisors to help comply with these new reporting requirements, especially if you have intricacies with your ownership structure. If your business structure is straight forward, you could consider filing directly through the portal referenced above. Suttle & Stalnaker PLLC is always available to help, but we are unable to file your reports directly for you as the process is currently designed. We hope this information is helpful in navigating this new filing requirement. There is also a helpful FAQ at www.fincen.gov/boi-faqs.