As a reminder to small business owners, new federal reporting requirements under the Corporate Transparency Act (CTA) took effect on January 1, 2024. Nearly every U.S. business entity, including LLCs, will be required to report ownership details to the Financial Crimes Enforcement Network (FinCEN) within one year. The reporting portal is now open at fincen.gov/boi.
Who Must Comply?
The CTA affects over 30 million small businesses that are either incorporated or registered to do business in any U.S. state or jurisdiction. Certain exempt entities include SEC-reporting public companies, regulated financial institutions, insurance companies, and tax-exempt non-profits.
What Information Is Required?
Affected companies must file a Beneficial Ownership Information Report (BOIR) that provides:
- Entity details, including legal name, address, and tax ID number.
- Information on each beneficial owner — any individual who either directly or indirectly owns 25%+ or exercises substantial control over the entity.
- Required details include full legal name, birthdate, current residential address, and identification details (e.g., password or state-issued ID).
Reporting companies formed before January 1, 2024, will have a year to submit their BOIR. However, any companies formed on or after that date have just 90 days to file. Additionally, businesses must keep their beneficial ownership information up-to-date and file an amended report within 30 days of any changes.
Be aware that FinCEN recently issued a notice about fraudulent compliance notices asking recipients to click suspicious links regarding CTA reporting. FinCEN is not mailing such notices. As always, be wary of clicking links or scanning QR codes unless you have verified the message is coming from a trusted source.
Tips For Streamlined Compliance
- Identify all beneficial owners now using the “substantial control” criteria (e.g., senior officers, important decision-making authority) at fincen.gov/boi.
- Collect required identifying details and documentation early.
- Consult advisors with questions on complex ownership structures.
- Congress may act and delay filing deadlines, but for now treat the above deadlines as firm and plan accordingly. Start preparing now to file complete and accurate beneficial ownership information on time.
- Penalties from $500 up to $10,000 per day could be assessed for failure to comply.
To discuss how the Corporate Transparency Act affects your company, call our business lawyers at Mahdavi, Bacon, Halfhill & Young, PLLC today.