Beginning January 1, 2024, the Corporate Transparency Act (CTA) requires certain companies to provide information related to the company’s “beneficial owners”, individuals who own or control the company.
WHO is a BENEFICIAL OWNER: An individual who owns 25% or more of the company, or someone who exercises substantial control over the company, such as senior officers.
WHO must report: A corporation, limited liability company, or entity created in the United States that registered with a State’s Secretary of State (SOS), or a foreign company that registered with a State’s Secretary of State. Schedule C sole proprietor LLCs, Schedule E rental LLCs and Schedule F farm LLCs are also required to report if they registered with the SOS.
WHO is EXEMPT: There are 23 exemptions, including public accounting firms, non-profit 501c3 organizations, banks, insurance companies, money service businesses and investment advisors who already report to the FinCEN or SEC. There is also an exemption for a “large operating company” that employs more than 20 employees on a full-time basis, has more than $5,000,000 in gross receipts, and physically operates in the United States.
WHAT must be reported: The legal name and trade name of the entity, physical address, jurisdiction where the entity was formed, FEIN, and beneficial owner’s name, address, date of birth, and US passport number or state driver’s license number, and an image of the passport or driver’s license showing the number.
WHEN must this information be reported: Companies formed prior to 1/1/2024 must report by 12/31/2024. Companies formed on or after 1/1/2024 must report within 90 days of creation. Companies formed on or after 1/1/2025 must report within 30 days of creation.
HOW to report: go to https://www.fincen.gov/boi and select File BOIR. There is no filing fee. After the initial reporting, there is no annual reporting required, except for changes to beneficial owners and any address changes. Updated reports must be filed within 30 days of the change.
PENALTY for failing to comply: Civil fines of up to $500 per day for as long as the report is missing or remains inaccurate, or a criminal penalty of a $10,000 fine and a two- year jail term.
Please note that each COMPANY is responsible for compliance. Please contact us after April 15th (unless you are a new business) if you have any questions or need any assistance.