In 2021, Congress enacted the Corporate Transparency Act that required many businesses in the United States to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN) effective January 1, 2024. If you own a business, established a limited liability company (LLC) as part of your estate plan, or are interested in doing so, our team has put together an overview of what you may need to know to ensure hassle-free compliance with this new act.
Who Must Report?
A company is required to file if it meets any of the following criteria:
- A corporation or limited liability company (LLC) formed in the U.S. including any business entity registered with the Secretary of State or a similar regulatory office.
- A foreign entity registered to do business in any U.S. state or with any Indian tribe even those based outside of the U.S. if it is registered to operate within any state or tribal jurisdiction.
Exemptions from Reporting
Although many businesses will be required to comply with the reporting requirements for Beneficial Ownership Information (BOI) there are several exceptions. These exemptions aim to reduce the regulatory burden on certain types of organizations already subject to similar or greater scrutiny. You are not required to file if your company falls into one of the following 23 exempt categories:
- Publicly Traded Companies: Entities whose securities are listed on a U.S. stock exchange. These companies are already subject to rigorous financial disclosure requirements by the Securities and Exchange Commission (SEC).
- Nonprofits: Organizations that are recognized as tax-exempt under the Internal Revenue Code must meet strict transparency requirements regarding their operations and funding.
- Certain Large Operating Firms: Companies that operate at a significant scale, have a physical presence in the U.S., and meet specific criteria set by FinCEN. These typically include those with a high revenue level and a substantial number of employees.
- Governmental Entities: This category includes federal, state, and local government agencies and departments, which are not required to report as they operate under public sector transparency rules.
How and When to Report
To fulfill your reporting requirements for Beneficial Ownership Information (BOI), you must submit all necessary details electronically via the FinCEN website at www.fincen.gov/boi. Upon successful submission, the system will issue a confirmation receipt to verify that your report has been filed. A breakdown of the key deadlines and additional details to help ensure compliance includes:
- Existing Entities: Companies formed or registered before January 1, 2024, must file their BOI by January 1, 2025. This gives existing companies ample time to gather and submit the required information.
- New Entities in 2024: Entities created or registered in 2024 must comply within 90 days following their effective registration or creation date. This allows new businesses a brief period to organize their ownership information soon after their establishment.
- Entities Established from 2025 Onwards: For businesses established on or after January 1, 2025, the reporting deadline is within 30 days following their registration. This quicker turnaround emphasizes the importance of preparing ownership information before business operations.
Filing involves reporting the details of individuals who ultimately own or control your company. Here’s what needs to be included:
- Identity of Beneficial Owners: You must disclose the names, addresses, and dates of birth of all individuals who, directly or indirectly, own 25% or more of the company’s equity interests or have significant control over the company’s operations.
- Nature and Extent of Ownership: Describe the extent and nature of each beneficial owner’s interest in the company.
Additional Reporting Details:
- Information Required: You must provide the names, addresses, dates of birth, and identification numbers (such as a driver’s license or passport number) for all individuals who qualify as beneficial owners.
- Secure Submission: FinCEN’s electronic system is designed to protect the confidentiality and integrity of the information submitted, ensuring compliance with data protection regulations.
- One-Time Reporting: Generally, BOI needs to be submitted only once unless there are changes or updates to the beneficial ownership information, which must then be reported within 30 days of the change.
Contact Us, Casey Lundregan Burns, P.C.
Understanding new federal reporting requirements for businesses or your limited liability company (LLC) may seem overwhelming. However, at Casey Lundregan Burns, P.C. our dedicated team is here to help you navigate the complexities of these requirements to help you plan for your future and protect your business.
Reach out to our experienced team today for guidance on BOI reporting or any other legal inquiries online or call us at (978) 981-4118 for a confidential consultation today!