On January 1, 2024 a new reporting requirement under the Corporate Transparency Act (“CTA”) went into effect.
What is the CTA?
The CTA is a law that was created to prevent money laundering, and it requires business owners to provide information to the government about themselves and potentially others involved in their business dealings. The information is known as the Beneficial Ownership Information report, or “BOI” as we’ve been calling it.
Who does the CTA Apply to?
Every corporation, LLC, or other entity created by the filing of a document with a Secretary of State or similar office under the law of a state or Indian tribe is required to file a BOI report unless it qualifies for an exemption.
Most of the companies that can claim exemption are subject to other, more stringent laws. For example, publicly traded companies and other entities that file reports with the SEC, securities brokers and dealers, and tax-exempt entities (nonprofits) are exempt from the CTA.
IMPORTANT: Unless an attorney tells you otherwise, if you own an entity that was registered with the government, you should assume that you’re subject to the CTA.
What Does the BOI Include?
The BOI will include information about the company, its beneficial owners, and, depending on when the company was formed, the company applicants.
A “beneficial owner” is an individual who, directly or indirectly, either exercises substantial control over the reporting company or owns or controls at least 25 percent of its ownership interests. There are 4 general criteria for determining substantial control, which you can evaluate with an attorney, but one of those criteria is if a person is a senior officer, such as a company President.
A “company applicant” is the individual who directly files the document that creates the domestic reporting company and the individual who is primarily responsible for directing or controlling the filing if more than one individual is involved in the filing of the document. This would include your attorney, for example, if an attorney forms your company for you. However, this portion only applies if you company was formed on or after January 1, 2024.
Can You File My BOI Report For Me?
Unless there’s a clear conflict of interest, we can file the BOI for you. When we file your BOI report, you’ll pay a one-time, flat fee of $299 upfront ($250 for current clients). Once your BOI report has been filed, you’ll receive a confirmation email from our team. Thereafter, you only need to file a new BOI report if your entity’s ownership structure changes or you become aware of an error in your filing. To request that we file for you, complete the questionnaire here (unless you’re a current client; email us for the discounted rate!)
Can I File My Own BOI Report?
Absolutely! Anyone can file a BOI report. However, like any other filing, it’s important to get things right the first time you file to avoid headaches and potentially penalties down the line. If you’d rather file your BOI report yourself but would like some guidance, consider downloading our guide here! You’ll pay $59 and you’ll be able to download the guide instantly upon payment.
When Does a BOI Report Need to Be Filed?
There are three different deadlines for compliance:
- Companies legally formed before January 1, 2024 have to provide information before January 1, 2025.
- Companies legally formed on or after January 1, 2024 have to provide information within 90 days of formation.
- Companies legally formed on or after January 1, 2025 will have to provide information within 60 days of formation.
What do we mean by “legally formed,” you ask? Here we’re talking about the date your entity was officially filed with the Secretary of State for the first time. If you’re not sure what your formation date is, this is a great reason to work with an attorney! They can give you that definitive date and make sure you’re covered.
What Happens if I Don’t File Correctly or In Time?
Non-compliance can result in a $500-a-day penalty (up to $10,000) and up to two years’ imprisonment, so don’t delay!
I Received an “Important Compliance Notice” with a QR Code on It in the Mail; What Do I Do?
FinCEN (the government entity in charge of handling the BOI reports) has been notified of recent fraudulent attempts to solicit information from individuals and entities who may be subject to reporting requirements under the CTA. The fraudulent correspondence may be titled “Important Compliance Notice” and asks the recipient to click on a URL or to scan a QR code. Those emails or letters are fraudulent. FinCEN does not send unsolicited requests. Please do not respond to these fraudulent messages, or click on any links or scan any QR codes within them. Read more about this here.
Where Can I Learn More?
You can learn more about the CTA here, and about BOI reports here!