Effective January 1, 2024, certain entities, defined as “Reporting Companies,” are now required to complete and submit an initial Beneficial Owner Information (“BOI”) Report to the Financial Crimes and Enforcement Network (“FinCEN”) in accordance with the provisions of the Corporate Transparency Act (“CTA”). The CTA aims to curb money laundering and tax fraud by requiring specific disclosures about the Beneficial Owners of a Reporting Company. There are certain exceptions to filing.
Domestic Reporting Company: a corporation, limited liability company, limited partnership, and any other entity created by the filing of a document with the Secretary of State or any similar office in the U.S.
Foreign Reporting Company: an entity (including corporations and limited liability companies) formed under the law of a foreign country and registered to do business in the U.S. by the filing of a document with a Secretary of State or similar office.
Trusts and General partnerships: Trusts and general partnerships are excluded from reporting.
Certain Entity Exemptions: The CTA contains twenty-three (23) exemptions from required BOI reporting, including tax exempt entities and large operating companies as further defined below.
Large Operating Companies: The large operating company exemption requires that an entity meets all six (6) criteria to qualify, including employing more than twenty (20) full time employees, having an operating presence in the U.S., reporting greater than $5,000,000 in gross receipts or sales for the previous year, and a few other requirements.
Additional details on exemptions from filing can be found on the FinCEN website at https://www.fincen.gov/boi-faqs#C_2
Reporting Company Information: Each Reporting Company is required to provide its full legal name, any trade names (dba’s or trading as names), current street address of its principal office (not a PO Box), jurisdiction of formation and Federal Taxpayer ID number (EIN).
Beneficial Owners: A Beneficial Owner is an individual who either directly or indirectly: (i) exercises substantial control over the reporting company; or (ii) owns or controls at least twenty-five (25%) percent of the Reporting Company’s ownership interests. For each Beneficial Owner, the following information will need to be provided: full legal name, date of birth, current residential address (no P.O. Box) and an uploaded copy of the Beneficial Owner’s current driver’s license or passport. Beneficial Owners may either provide this information on each applicable BOI Report or may obtain a FinCEN Identification Number (“FinCEN ID”) by submitting the necessary information once and then using that FinCEN ID on each BOI Report.
Company Applicant: For entities formed after January 1, 2024, the Company Applicant must be reported. This would be the person sending/filing the formation document with the Secretary of State and the person supervising the preparation of the documents. If our office filed your company with the Secretary of State, we can provide you with our FinCEN IDs as Company Applicants upon request. Company Applicants do not need to be reported for entities created prior to 2024.
Due to the nature of some of our services, you may provide us with personally identifiable information such as your name, email address, username, password, address, phone number, and other contact information that you voluntarily transmit with your communication to us.
Qualifying Reporting Companies formed prior to January 1, 2024 must file the initial BOI Report no later than January 1, 2025.
Qualifying Reporting Companies formed after January 1, 2024 and prior to January 1, 2025 must file the initial BOI Report within 90 days of formation.
Qualifying Reporting Companies formed after January 1, 2025 must file the initial BOI Report within 30 days of formation.
The willful failure to file or the intentional providing of false information may result in civil and criminal penalties. The civil penalty may include a fine of up to $500 per day for noncompliance. The criminal penalty may include a fine of up to $10,000 and/or up to two years in prison. These penalties may not only be applied to the Reporting Company but also to a Beneficial Owner with substantial control over the Reporting Company.
No Annual Filing Required: There is no annual filing requirement for BOI Reports.
Changes and Inaccuracies Must Be Reported: Please be aware that once the initial BOI Report has been filed, the Reporting Company must report any inaccuracy or change in information within 30 days. These changes may include, but are not limited to, change in business name, change in Beneficial Owner, change in Beneficial Owner personal information or change of address. If changes and inaccuracies are not reported, penalties may apply. It is the responsibility of the Reporting Company and Beneficial Owners to ensure any corrections or updates get reported to FinCEN.
Modify You Existing Company Documents: Due to the reporting requirements imposed by the CTA, it is best practice to update your existing governing documents (e.g. Operating Agreement, Bylaws, etc.) to include a provision requiring all Beneficial Owners and individuals with substantial control to report any changes in their personal information to the Reporting Company within fifteen (15) days since the Reporting Company will only have thirty (30) days to report such change by filing an updated BOI Report. If you would like our assistance in reviewing and amending your existing governing documents, please reach out to our team.
Consider Obtaining a FinCEN ID: Obtaining a FinCEN ID is not required to file a BOI Report, however, for individuals who own or control multiple entities, filing BOI Reports directly with FinCEN will be streamlined for Beneficial Owners who have a FinCEN ID.
Meeting the requirements of new federal regulations is often overwhelming for business owners. Consulting with a corporate attorney is always recommended if you have unanswered questions or don’t want to risk making mistakes on your BOI report.
Our firm provides a personalized approach based on each client’s unique needs.
Call us at 303-502-5617 or send us a message on our contact page to schedule a consultation.
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