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As of January 1, 2024, many entities are required to report certain information to the U.S. government about who ultimately owns and controls them. All entities defined as a “reporting company” under the Corporate Transparency Act (the “CTA”) are required to submit to FinCEN a report containing beneficial ownership information (“BOI”). Filings will be conducted through a secure filing system on FinCEN’s website, and will not require a fee. Anyone authorized by the reporting company may file a report on the company’s behalf. The contents of the report will be stored in a secure, non-public database.
Reporting Company
Any corporation, limited liability company, or other entity created by the filing of a document with a secretary of state or similar office in the United States is a domestic reporting company, unless otherwise exempt. In addition, an entity formed under the law of a foreign company may be a foreign reporting company if it has registered to do business in the United States by filing a document with a secretary of state or similar office. There are 23 types of exempt entities, including publicly traded companies meeting specific requirements, many tax-exempt entities, and certain large operating companies. More information regarding exempt entities is available at https://www.fincen.gov/boi-faqs. Most small businesses will not fit within one of the exemptions.
Filing Deadlines
A reporting company created or registered to do business before January 1, 2024, has until January 1, 2025, to file its initial report, containing information about itself and its beneficial owners. A reporting company created or registered on or after January 1, 2024, and before January 1, 2025, has 90 calendar days after receiving notice of the company’s creation or registration to file its initial report, containing information about itself, its beneficial owners, and its company applicants. A reporting company created or registered on or after January 1, 2025, will have 30 calendar days from actual or public notice that the company’s creation or registration is effective to file its initial report, containing information about itself, its beneficial owners, and its company applicants.
Beneficial Ownership
A “beneficial owner” of a reporting company is an individual who either directly or indirectly: (1) exercises substantial control over the reporting company, or (2) owns or controls at least 25% of the reporting company’s ownership interests. This includes senior officers, individuals with authority to appoint or remove certain officers or a majority of directors of the reporting company, important decision-makers, and individuals having any other form of substantial control over the reporting company. For each individual who is a beneficial owner, a reporting company must provide the individual’s: (1) name; (2) date of birth; (3) residential address; and (4) identifying number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the state or jurisdiction which issued the identification document, along with an image of such document.
Company Applicants
A reporting company created or registered on or after January 1, 2024, must also report its “company applicants.” Only two individuals, at a maximum, may qualify as a company applicant: (1) the individual who directly files the document that creates or registers the company; and (2) if more than one person is involved in the filing, the individual who is primarily responsible for directing or controlling the filing. For example, if an attorney filed a Certificate of Organization for your LLC or the Articles of Incorporation for your corporation with the secretary of state, the attorney would be a company applicant. A reporting company must provide the same information for each individual who is a company applicant as is required for a beneficial owner. With respect to a company applicant who forms or registers entities in the ordinary course of its business, such as an attorney, the reporting company must report the company applicant’s business address. A company applicant may also apply for its own, unique FinCEN identifier. In that case, the reporting company may provide the company applicant’s FinCEN identifier in lieu of the otherwise required information.
Entity Information
A reporting company must also report: (1) its legal name; (2) any trade names or “doing business as” (d/b/a) names; (3) the street address of its principal place of business (cannot be a P.O. box); (4) its jurisdiction of formation or registration; and (5) its Taxpayer Identification Number.
Maintaining Compliance
There is no annual reporting requirement after the initial report has been filed. A reporting company must file an updated or corrected report, however, if there is any change to the required information about the company or its beneficial owners. Examples of such a change include, without limitation: (1) any change to the information initially reported, such as registering a new trade name; (2) a change in beneficial owners, including death of a beneficial owner or appointing a new CEO; or (3) any change to a beneficial owner’s name, address, or unique identifying number provided in a previous report. The updated report must be filed no later than 30 days after the date on which the change occurred.
Additional Resources
FinCEN has prepared a comprehensive list of frequently asked questions for informational purposes, which can be found at https://www.fincen.gov/boi-faqs. FinCEN has also prepared a Small Entity Compliance Guide, which may be revised and updated, currently accessible at https://www.fincen.gov/boi/small-entity-compliance-guide. For the latest information, visit https://www.fincen.gov/boi.
Compliance with the CTA is the responsibility of the reporting companies, and our engagement does not include legal advice relating to any potential CTA reporting obligations, beneficial ownership analysis, or other assistance relating to the CTA.