Starting January 1, 2024, the Corporate Transparency Act (CTA) requires certain small businesses to report their beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN). The aim of this law is to increase transparency and combat financial crimes like money laundering and tax evasion. As a small business owner, it is important to understand your obligations under this new law to avoid penalties.

Who Must Report?

Most U.S.-based corporations, limited liability companies (LLCs), and similar entities must report unless they qualify for an exemption. Exemptions include large operating companies with over 20 full-time employees and $5 million in revenue, banks, tax-exempt entities, and inactive businesses. If your business is newly registered or does not fall under these categories, you are likely required to report.

What Information Must Be Reported?

You must report the personal information of all beneficial owners. This includes individuals who directly or indirectly own or control 25% or more of your company or those with substantial control over your business. You will need to provide their name, date of birth, address, and a copy of an acceptable identification document. You will also need to identify and report information on your company applicants, such as individuals who file or are responsible for registering your company.

When and How to File?

For companies created before January 1, 2024, the deadline to file the initial BOI report is January 1, 2025. For those created on or after January 1, 2024, the deadline is 30 days from the date of registration. Reports must be filed electronically through FinCEN’s secure filing system.

Step-by-Step Guide to Filing Your BOI Report

Filing your BOI report might seem overwhelming, but it can be completed in a few straightforward steps:

1. Gather Required Information: Before you begin the filing process, collect all the necessary information. You will need:
   • Company details such as the legal name, address, and state of formation.
   • Personal details of all beneficial owners and company applicants, including their full legal names, dates of birth, residential addresses, and identification documents (e.g., a driver’s license or passport).
2. Create an Account on FinCEN’s Filing Portal: Visit the FinCEN BOI filing website at www.fincen.gov/boi and create an account. This account will allow you to securely submit and manage your BOI reports.
3. Complete the BOI Report Form: Once logged in, select the option to file a new BOI report. Enter the required information about your company, beneficial owners, and company applicants. The form will guide you through the data fields step-by-step, ensuring you provide all necessary details.
4. Upload Identification Documents: For each beneficial owner and company applicant, you will need to upload clear, scanned copies of acceptable identification documents. Make sure the scans are legible and meet FinCEN’s requirements.
5. Review and Submit the Report: Before submitting, review all the information you’ve entered for accuracy. Errors or omissions could lead to compliance issues or penalties. Once satisfied, submit the report through the portal.
6. Confirmation and Record Keeping: After submission, FinCEN will provide a confirmation receipt. Save this document for your records as proof of compliance. You are also responsible for updating this information if there are any changes to the beneficial ownership of your business.

Penalties for Non-Compliance

Failure to comply with the CTA can result in severe penalties, including fines of up to $500 per day until the information is reported, and criminal penalties, including imprisonment for up to two years. It’s essential to stay informed and meet your reporting obligations promptly to avoid these consequences.

Stay Informed and Stay Compliant

The new CTA reporting requirements are designed to promote financial transparency, but compliance doesn’t have to be burdensome. By understanding the steps and filing your BOI report accurately, you can ensure that your business remains in good standing. For more detailed guidance and updates, visit FinCEN’s official website at www.fincen.gov/boi.

Carrie Ward has spent years as an attorney focused on copyright and other types of intellectual property law. Her clients include media companies, musicians, filmmakers, and podcasters. With an in-house background at ABC and Entercom Communications (now known as Audacy), Carrie looks at legal issues from the client’s perspective and comes up with answers to help her clients get things done. She regularly serves as outside general counsel for her corporate clients.