Corporate Transparency Act – Beneficial Ownership Information Reporting Requirement
As we have communicated previously, a significant number of businesses will be required to comply with the Corporate Transparency Act (CTA). This Act requires the disclosure of the beneficial ownership information (otherwise known as BOI) of certain entities from people who own or control a company.
What entities are required to file to comply with CTA’s BOI reporting requirements?
Entities organized both in the US and outside the US may be subject to the CTA’s reporting requirements. Domestic companies required to report include corporations, limited liability companies (LLC’s) or any similar entity created by the filing of a document with the Secretary of State.
Most of our clients will be required to file. However, there are also 23 different exemptions from filing the return. There is one notable exception for large operating companies.
To qualify for the large operating company exemption, the company must:
Have more than 20 full time employees in the US
Have more than $5 million in gross receipts or sales within the US
Be physically present in the US
When must companies file?
There are different filing timeframes depending on when an entity is registered/formed or if there is a change to the beneficial owner’s information.
New entities (created/registered after 12/31/23) — must file within 90 days
Existing entities (created/registered before 1/1/24) — must file by 1/1/25
Reporting companies that have changes to previously reported information or discover inaccuracies in previously filed reports — must file within 30 days.
NOTE: If you closed a business in 2024, you will still need to file this report.
Risk of non-compliance
Penalties for willfully not complying with the BOI reporting requirement can result in criminal and civil penalties of $591 per day and up to $10,000 with up to two years of jail time.
How to file
You can file this yourself at the FinCEN website OR our firm can handle the filing. In either case, we recommend applying first for a FinCEN ID and then submitting the reports.
Looking for more information on how we can help keep you compliant? Feel free to schedule a free discovery call and we would be happy to talk.