January 1 Deadline Approaching for Reporting Beneficial Ownership Information

Are you among the millions of business owners affected by the Corporate Transparency Act (CTA)? If so, you are required to report Beneficial Ownership Information (BOI) to the Treasury’s Financial Crimes Enforcement Network (FinCEN). It is crucial to understand the FinCEN reporting requirements and know where to find additional information. Not filing, or filing late, may result in severe penalties.

Understanding the Corporate Transparency Act (CTA) The CTA, enacted in 2021, aims to increase business ownership transparency by identifying individuals who have direct or indirect ownership (“beneficial ownership”) in a company. The primary goal is to reduce fraudulent and illegal activities. FinCEN began accepting BOI reports through their website in January 2024.

Most existing U.S. businesses and foreign businesses registered in the U.S. before January 1, 2024, must disclose the required beneficial ownership information by January 1, 2025.

For newer businesses, the deadlines are more stringent. Businesses established or registered in 2024 have 90 days to file, while those established after January 1, 2025, have only 30 days.

Who is a Beneficial Owner? A Beneficial Owner is anyone who:

• Directly or indirectly exercises substantial control over a business,
• Owns or controls at least 25 percent interest in a business.

This includes individuals who are senior officers, have authority to appoint or remove key officers or a majority of directors, are significant decision-makers, or otherwise hold substantial control. FinCEN provides detailed definitions for these categories.

Who Must Report Under the CTA? Businesses that must report beneficial ownership information include:

• U.S. corporations, LLCs, or similar entities established by filing with a secretary of state or similar office.
• Foreign businesses registered to operate in any U.S. state or Tribal jurisdiction.

Required Information for Filing A reporting company must provide:

• Its legal name, trade names, address, jurisdiction of registration, and taxpayer identification number.
• For each beneficial owner: name, date of birth, residential address, and an identifying number from an identification document, such as a passport or driver’s license.

How to Prepare and File BOI Use the FinCEN BOI E-Filing system to electronically submit the Beneficial Ownership Information Report.

Consequences of Non-Compliance Failing to meet the deadline can result in substantial costs, including civil penalties of $500 per day and criminal penalties up to $10,000 and/or two years in prison.