12/10/2024
As you may have heard, under the new Corporate Transparency Act (CTA), most small business owners are required to file corporate transparency reports with beneficial ownership information (BOI). Corporations, LLCs, and other entities formed by filing with a secretary of state will be required to submit BOI reports (“Reporting Companies”).
For most businesses, the filing deadline is January 1, 2025. Those who fail to file by this deadline — or fail to update this information if needed — could face up to two years imprisonment and fines up to $10,000, in addition to civil penalties of up to $591 per day.
Reporting Companies have a limited time to file their initial BOI reports:
1. If the company was established before January 1, 2024, the filing deadline is January 1, 2025.
2. If the company created between January 1, 2024, and January 1, 2025, you have 90 days from either the actual notice of formation or public announcement, whichever comes first, to file.
3. Companies established on or after January 1, 2025, will have 30 days from formation or public announcement of their formation to submit their first report to FinCEN.
4. Companies must submit any corrections or updates to previously filed information within 30 days.
According to the CTA, an individual qualifies as a beneficial owner if they directly or indirectly have a significant ownership stake in a company. This person either has a major influence on the reporting company’s decisions or operations, owns at least 25% of the company's shares, or has a similar level of control over the company's equity.
All Reporting Companies must provide their legal name and trademarks, as well as their current address. They’ll also need to provide a taxpayer identification number and specify the jurisdiction where they were formed.
Companies formed post-January 1, 2024, must provide information regarding the business, its beneficial owners, and its company applicants — including owners’ and applicants’ names, addresses, birthdays, and identification numbers (such as a license or passport number), and the jurisdiction of the documents. Businesses established before that date can omit information regarding company applicants, and must only submit information on the business and beneficial owners.
While the CTA does not require businesses to submit annual reports, the initial filing period may not be the only time you’ll be required to submit information. In addition to the required initial filing, there are requirements to update the original filing when things change. Some of the things that require an updated filing are not things a business owner has ever thought were important to track, and the timeline to report these changes can be as short as 30 days. For instance, if a beneficial owner changes their address, legally changes their name due to marriage or divorce, or obtains a new driver's license, it may necessitate an update to a company’s BOI report. Operational changes or a new delegation of authority could also qualify.
Reach out if you have any questions. And don't fall for any solicitations you receive in the mail!
