As a result of changes in US law, most newly formed companies, as well as many existing companies, will need to comply with the beneficial ownership information (BOI) reporting rule under the Corporate Transparency Act (CTA).

The Beneficial Ownership Information Reporting Rules require certain entities to file beneficial ownership information (BOI) reports to FinCEN. Reports contain information about the entity itself and two categories of individuals:

1. Beneficial owners
2. Company applicants

A beneficial owner is an individual who owns or controls at least 25 percent of a company or has substantial control over the company, and a company applicant is an individual who directly files or is primarily responsible for the filing of the document that creates or registers the company.

Starting on January 1, 2024, BOI reports must be filed electronically using FinCEN’s secure filing system.

Requirements to file a report.

• Reports will be accepted starting on Jan 1, 2024
• Reporting companies created or registered to do business before January 1, 2024, will have additional time – until January 1, 2025 – to file their initial BOI reports.
• Reporting companies created or registered on or after January 1, 2024, and before January 1, 2025, have 90 calendar days after receiving actual or public notice that their company’s creation or registration is effective to file their initial BOI reports. Specifically, this 90-calendar day deadline runs from the time the company receives actual notice that its creation or registration is effective, or after a secretary of state or similar office first provides public notice of its creation or registration, whichever is earlier.
• Reporting companies created or registered on or after January 1, 2025, will have 30 calendar days from actual or public notice that the company’s creation or registration is effective to file their initial BOI reports.

www.fincen.gov/boi.

Not all companies are required to report BOI to FinCEN under the Reporting Rule. Companies are required to report only if they meet the Reporting Rule’s definition of a “reporting company” and do not qualify for an exemption.

Two categories of reporting companies – a “domestic reporting company” – company created by filing of a document with a secretary of state and a “foreign reporting company” – company created by filing of a document with a secretary of state.

There are 23 categories of exemption from reporting company requirements.

Large operating companies, which includes any company that employs more than 20 full-time employees in the US, has more than $5,000,000 in gross receipts or sales in the US, and has an operating presence at a physical office within the US.

Other exempted companies – Securities reporting issuer, Governmental authority, Bank, Credit union, Accounting firm, Tax-exempt entity, Insurance company, Large operating company, Inactive entity

Willful failure to report – penalties up to $500 for each day that violation continues, or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000 and up to two years in prison. Senior officers of an entity that fails to file a required BOI report may be held accountable for that failure.

Beneficial owner

A beneficial owner is any individual who, directly or indirectly:

Exercises substantial control (Senior officer/authority to appoint or remove certain officers/important decision maker) over a reporting company;

OR

Owns or controls at least 25 percent of the ownership interests of a reporting company.

Note for trusts: a trustee of a trust or similar arrangement may exercise substantial control over a reporting company.

Need to file corrected reports when previously reported information was inaccurate and corrected reports sue within 30 calendar days after the reporting company becomes aware or has reason to know of an inaccuracy.

*No penalties for filing inaccurate BOI report provided it is corrected within 90 calendar days of when it was filed.

Required documents checklists

Reporting company

• Legal name and trade name
• Complete current U.S. address – if the reporting company’s principal place of business is not in United States, the primary location in the United States where the company conducts business
• State, or foreign jurisdiction of formation
• IRS Taxpayer Identification Number (incl. an EIN)

Each Beneficiary Owner and Company Applicant (individual who directly files the document to create or register the reporting company and the individual who is primarily responsible for directing or controlling such filing if more than one individual is involved in the filing)

• Legal name and trade name
• Date of birth
• Complete current address
• Unique identification number (one of the following non-expired documents)

1. U.S. passport

2. State driver’s license

3. Identification document issued by a state

*If an individual does not have any of the previous documents, foreign passport