Information listed on this site is specific to companies formed in the U.S.
Refer to the bottom of this page for links to learn the requirements for all companies.
Refer to the bottom of this page for links to learn the requirements for all companies.
WHAT IS IT?
The U.S. Congress passed the Corporate Transparency Act (CTA) in 2021. A part of the CTA requires owners of certain businesses to report the Beneficial Ownership Information (BOI) of their companies to the U.S. Financial Crimes Enforcement Network (FinCEN).
WHICH COMPANIES ARE AFFECTED?
Most corporations and limited liability companies created by the filing of documents through the secretary of state "or any similar office under the law of a state or Indian tribe" must comply. (Federal Register E.I.)
Although partnerships are not specifically mentioned, reporting may still be required, if they are formed through a secretary of state filing.
Certain companies are exempt from reporting, including publicly traded companies, public accounting firms subject to SOx, and large companies with 20 full-time employees that also gross at least $5 million in revenue. Click HERE to see additional exemptions.
WHEN DOES THE REQUIREMENT BEGIN?
BOI reporting begins January 1, 2024.
WHY IS THIS BEING REQUIRED?
The intent is to help prevent financial crimes such as money laundering, drug trafficking, tax fraud, terrorist financing, and the like. Generally speaking, smaller companies and their owners are not subject to regulatory or other requirements that would provide government agencies with confirmation that controls exist to prevent these types of illegal financial activities.
WHAT INFORMATION MUST BE SHARED?
The full legal name of the company, its trade or DBA name (if applicable), its current U.S. address, and its state of formation.
For every person that directly or indirectly owns at least 25% of the company OR a person that directly or indirectly exercises substantial control over the company, the following must be shared with FinCEN:
ARE THE PENALTIES REALLY $500 PER DAY?
It is the opinion of Integrity 1st that FinCEN is expecting that every business will become aware of the BOI reporting requirement during the calendar year 2024. FinCEN documents state they are issuing "guidance, as well as conducting outreach, to ensure that all reporting companies are aware of their reporting obligations, including their obligations to update or correct beneficial ownership information." (FinCEN Small Entity Compliance Guide)
All FinCEN and other government documents are silent in regards to penalties from a company not reporting from being unaware.
There are penalties noted of up to $500 per day related to a WILLFUL FAILURE to report and/or WILLFUL ERROR IN or FRAUDULENT reporting. These potential penalties apply to both initial reporting and any needed updates or corrections to reporting. Senior officers responsible for a failure to file may be held accountable.
WHO HAS ACCESS TO OWNERSHIP INFORMATION? IS IT SECURE?
BOI reporting provides FinCEN with access to owners' sensitive personal information. As such, according to the Federal Register (II. A. Access to BOI), access will be limited to "specified parties for particular purposes." The specified parties include
HOW DO I SUBMIT THE REQUIRED INFORMATION? DO I NEED TO HIRE A CPA OR ATTORNEY?
Company owners are able to report BOI on their own; a CPA or attorney is not needed.
However, businesses with complex ownership structures may want to consult their accountant or attorney to determine if an exemption applies or other concerns.
Responsible parties may choose to create individual and/or company FinCEN identifiers. HOWEVER, there is currently no process to deactivate an identifier that is no longer needed. Owners may choose to use the FinCEN system to report BOI, as an alternative.
The U.S. Congress passed the Corporate Transparency Act (CTA) in 2021. A part of the CTA requires owners of certain businesses to report the Beneficial Ownership Information (BOI) of their companies to the U.S. Financial Crimes Enforcement Network (FinCEN).
WHICH COMPANIES ARE AFFECTED?
Most corporations and limited liability companies created by the filing of documents through the secretary of state "or any similar office under the law of a state or Indian tribe" must comply. (Federal Register E.I.)
Although partnerships are not specifically mentioned, reporting may still be required, if they are formed through a secretary of state filing.
Certain companies are exempt from reporting, including publicly traded companies, public accounting firms subject to SOx, and large companies with 20 full-time employees that also gross at least $5 million in revenue. Click HERE to see additional exemptions.
WHEN DOES THE REQUIREMENT BEGIN?
BOI reporting begins January 1, 2024.
- Companies that exist prior to January 1, 2024 must comply by January 1, 2025 (i.e., within one year).
- Companies formed during the calendar year 2024 must comply within 90 days of receiving secretary of state confirmation that the business formation is complete.
- Companies formed on or after January 1, 2025 must comply within 30 days of receiving secretary of state confirmation that the business formation is complete.
WHY IS THIS BEING REQUIRED?
The intent is to help prevent financial crimes such as money laundering, drug trafficking, tax fraud, terrorist financing, and the like. Generally speaking, smaller companies and their owners are not subject to regulatory or other requirements that would provide government agencies with confirmation that controls exist to prevent these types of illegal financial activities.
WHAT INFORMATION MUST BE SHARED?
The full legal name of the company, its trade or DBA name (if applicable), its current U.S. address, and its state of formation.
For every person that directly or indirectly owns at least 25% of the company OR a person that directly or indirectly exercises substantial control over the company, the following must be shared with FinCEN:
- Full legal name
- Date of birth
- Complete current address
- Unique identifying number, issuing jurisdiction, and image of either a U.S. passport, state driver's license, or other identification document issued by a state, local government, or tribe; or the person's FinCEN identifier
ARE THE PENALTIES REALLY $500 PER DAY?
It is the opinion of Integrity 1st that FinCEN is expecting that every business will become aware of the BOI reporting requirement during the calendar year 2024. FinCEN documents state they are issuing "guidance, as well as conducting outreach, to ensure that all reporting companies are aware of their reporting obligations, including their obligations to update or correct beneficial ownership information." (FinCEN Small Entity Compliance Guide)
All FinCEN and other government documents are silent in regards to penalties from a company not reporting from being unaware.
There are penalties noted of up to $500 per day related to a WILLFUL FAILURE to report and/or WILLFUL ERROR IN or FRAUDULENT reporting. These potential penalties apply to both initial reporting and any needed updates or corrections to reporting. Senior officers responsible for a failure to file may be held accountable.
WHO HAS ACCESS TO OWNERSHIP INFORMATION? IS IT SECURE?
BOI reporting provides FinCEN with access to owners' sensitive personal information. As such, according to the Federal Register (II. A. Access to BOI), access will be limited to "specified parties for particular purposes." The specified parties include
- federal agencies engaged in national security, intelligence, or law enforcement; state, local, and tribal law enforcement agencies (with a court order related to a criminal or civil investigation);
- foreign law enforcement agencies with additional criteria;
- financial institutions facilitating compliance with customer due diligence requirements under applicable law (with the company's consent);
- federal regulated agencies; and the
- U.S. Treasury department.
HOW DO I SUBMIT THE REQUIRED INFORMATION? DO I NEED TO HIRE A CPA OR ATTORNEY?
Company owners are able to report BOI on their own; a CPA or attorney is not needed.
However, businesses with complex ownership structures may want to consult their accountant or attorney to determine if an exemption applies or other concerns.
Responsible parties may choose to create individual and/or company FinCEN identifiers. HOWEVER, there is currently no process to deactivate an identifier that is no longer needed. Owners may choose to use the FinCEN system to report BOI, as an alternative.
