The Corporate Transparency Act (CTA), enacted in 2021, aims to increase transparency in business entity structure and ownership, to combat ongoing national (and international) concerns, such as money laundering, tax fraud, and other illicit activities. This is done by gathering information about the ownership of specific entities operating in or accessing the U.S. market. The Corporate Transparency Act’s reporting requirement for businesses to file a Beneficial Ownership Information (BOI) registration with the U.S. Treasury Department, Financial Crimes Division (“FinCEN”), became effective date January 1, 2024.  The reporting is done through an online portal of the federal government.

According to a recent Small Business Administration report, 27,104,006 small businesses were categorized as “non-employer firms,” meaning a company with owners, with no actual active employees.  The CTA aims to enhance the transparency of all businesses with limited liability protections, with a focus on those smaller entities.

Beneficial Owner Information – Filing Required

The CTA requires disclosure of a business entity’s “Beneficial Owners.”  Beneficial Owners fall into two categories:  1) Those exercising substantial control over a reporting company; and 2) Individuals owning or controlling at least 25% of ownership interests in a reporting company.

This dual categorization aims to close loopholes, with ownership interests determined by capital and profit shares in the company. Beneficial owners must report their name, date of birth, address, and unique identifier number to FinCEN, along with a photo of the document. An individual filing directly may obtain a “FinCEN identifier” for use in place of specific information.

Who does the Corporate Transparency Act impact?

The CTA impacts MOST businesses operating in the United States.  US-based companies/entities required to file include Corporations, Limited Liability Companies (LLCs), Limited Liability Partnerships (LLPs), or most other entities created by filing a document with a state, or tribal, office.  Foreign-based companies required to file include business entities formed under foreign laws but registered to do business in the U.S. by filing with a state, or tribal, office.

Basically, if the business is a business entity that was required to file/register through their state’s Secretary of State, that business is most likely required to file a BOI report.

There are a few business entity categories that are not required to report BOI, but those business categories are typically exempting those businesses that already have a higher transparency standard to uphold.

Who is required to file and Who is Exempt?

Sole-proprietorships with no limited liability entity structure are NOT required to file.

If you are unsure if your entity is required to file, please ask us.

Exemptions cover securities issuers, domestic governmental authorities, banks, and others outside the specified categories.

Deadlines for Filing and Penalties for Non-Filing

Entities required to file that were formed prior to January 1, 2024, have until December 31, 2024, to file their BOI report, before incurring penalties.  Entities formed during 2024 have 90 days from their date of formation to file, while entities formed in 2025 and beyond will have 30 days from the company’s date of creation to file their BOI report.

A person who willfully violates the BOI reporting requirements may be subject to civil penalties of up to $500/day for continued violations, up to $10,000.  That person may also be subject to criminal penalties of up to $10,000 and two years’ imprisonment.

Do I Ever Have to Re-file?

Companies are not required to file additional BOI reports unless the company ownership or structure changes, the company address changes, or if any of the Beneficial Ownership changes their residential address.

Company Applicants, if Applicable.

The CTA may require disclosure of a “Company Applicant,” if the entity was formed after January 1, 2024.  Company applicants can only be:  1) The individual filing the document creating the entity or first registering it to do business in the U.S.; or 2) The individual primarily responsible for directing or controlling the filing by another.

How Can We Help?  “Let Lawler Do It”

Mr. Lawler has helped many, many business entities comply with these brand-new filing requirements. While BOI filing is not difficult or complex, it might be intimidating and time-consuming if you are not familiar with the process. However, we can take this off of your “to-do list.”  It’s quick, easy, and cost-effective at only $100. Simply complete the fields on this page and hit submit to start the process.  Mr. Lawler will be alerted to your needs and will reach out to complete the process with you.