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  • Writer's pictureNicole Bernier, Esq.

All About Beneficial Ownership Information Reporting: Who, What, When, and Where?!

Remember my earlier post, about the Corporate Transparency Act? Well, it's time to dive a little deeper. Think of this as your go-to reference guide for all the details!


Quick recap: The CTA is a new law that requires all entities to report information to the U.S. government about their beneficial owners and other key players. This is done through filing a “Beneficial Ownership Information Report” (BOI Report). Compliance is key, as failing to file the report may result in civil or criminal penalties under the CTA. Let's get into the details!


WHO needs to file the BOI Report:

  • Entities registered with a state Secretary of State, such as:

    • LLC's

    • Corporations

    • Foreign entities registered to do business in the U.S.

    • (this does not include Sole Proprietorships)

  • Who are not exempt, such as:


If both of the above are satisfied, then a BOI Report is required.


WHAT to Include in the BOI Report: The BOI Report will require you to include the EIN and any trade name of your entity, and personal details like names, addresses, and current ID photos of every beneficial owner of your business entity. In addition, for entities formed on or after January 1, 2024, this same information is required for company applicants.

Who is a beneficial owner or company applicant?

  • A beneficial owner of a company is any individual who, directly or indirectly, exercises substantial control over a reporting company, or who owns or controls at least 25% of the ownership interests of a reporting company.

    • May include officers, directors, and other persons with substantial control over the company, even if they don't have ownership in the company.

    • "Substantial control" is a case-by-case determination.

    • May include persons owning indirectly through another entity.

  • A company applicant is any person responsible for the formation of the entity.

    • Can be the owner, an officer, a paralegal or lawyer.

    • Up to 2 company applicants can be reported.


For more information on who is considered a beneficial owner or controlling person, consult with a legal professional!


WHEN to file:

Initial Reports:

  • Existing Entities (formed before Jan 1, 2024):

    • Must file a BOI Report with the Financial Crimes Enforcement Network (Fin CEN) by December 31, 2024.

    • If you prefer to get it out of the way, you have the option to file it anytime during 2024.


  • New Entities (formed on or after Jan 1, 2024):

    • If your entity is formed in 2024, you have 90 days from the date formation is effective to file the BOI Report.

    • After December 31, 2024, you'll need to file the BOI Report within 30 days of your business formation.


Subsequent Reports/Corrections:

  • If any of the information you provided in the initial BOI Report changes in the future, you need to file an updated report within 30 days.

  • If you discover a mistake/inaccuracy in the initial filing, you need to file a corrected report within 30 days.


WHERE to file the BOI Report:

  • You can file a report online, through the BOI e-Filing System. It is pretty straightforward, and free to use. However, if the filing process is overwhelming for you and you need assistance, you can ask a legal professional to handle this for you.

Conclusion

The CTA aims to increase transparency in business, making it tougher for illegal activities to hide behind corporate structures. This move is designed to safeguard the integrity of the U.S. financial system and ensure businesses operate legitimately. Failure to comply can lead to penalties, emphasizing the importance of understanding and adhering to these new regulations.


If you have questions or need guidance on navigating the BOI reporting process, feel free to reach out for help!

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