Small Business Owner's Guide to the Corporate Transparency Act (CTA) and Beneficial Ownership Information (BOI) Reporting

Update following March 1st federal ruling:

UPDATED: March 7, 2024 - The Corporate Transparency Act and its subsequent laws and filing processes and deadlines are not currently being enforced, as the program was federally paused on March 1st, 2024.

The processes and deadlines mentioned in this blog are not currently being enforced by FinCEN, and are subject to change as the legal action between NSBA and Congress unfolds. We'll provide updates and action-items for small business owners as the legal discourse continues.

To learn more about the currently-paused legislation, continue reading below.

What is the Corporate Transparency Act?

The Corporate Transparency Act (CTA) of 2024 introduces a new layer of complexity to the landscape of business regulation. The bipartisan law came into effect on the first of the year, requiring businesses to report their beneficial ownership information to FinCEN.

Using this information, federal authorities can proactively track down criminal actors—preventing tax evasion and enhancing national security.

Let's delve into the CTA's intricacies and deepen our understanding of what Beneficial Ownership Information (BOI) reporting entails.

What is the BOI report?

It’s a mandatory report detailing the key Beneficial Ownership Information attributes of the Reporting Company filing report. The Corporate Transparency Act defines a Reporting Company as any non-exempt entity created or registered to do business in the U.S. by the filing of a document with a Secretary of State or any similar office under the laws of a state or tribe.

It’s important to note that the BOI report is not an annual requirement. The report only needs to be submitted once–unless there’s been a change of ownership and the filer needs to update, or correct information.

I'm a small business owner. Am I required to submit the report?

As most small businesses are generally registered as Reporting Companies, most will have to file a BOI report.

Additional entities required to file the BOI report:

Foreign companies registered to do business in the U.S., including entities incorporated abroad but operating in the U.S.
Certain trusts and charitable organizations also fall under the CTA's umbrella.

There are 23 types of entities completely exempt from filing:

Publicly traded companies and other entities that file reports with the SEC
Banks
Credit unions
Money services businesses
Securities brokers and dealers
Tax-exempt entities
Insurance companies
State-licensed insurance producers,
Pooled investment vehicles

What is included in the BOI report?

The legal name of the company and any trade name (DBA) used by the company
Jurisdiction of incorporation or formation (the state or country)
The current street addresses of its principal place of business. If the principal place of business is not in the US, the company will report the address from which it conducts business in the US
Taxpayer identification number (EIN/SSN/TIN)

Is my business partner a beneficial owner too?

It depends. According to the CTA–any individual, who directly, or indirectly, It depends. either exercises substantial control over such reporting company or owns or controls at least 25% of the ownership interest of such reporting company–is a Beneficial Owner.

A beneficial owner does not include:

A minor child
A nominee, intermediary, custodian, or agent acting on behalf of another individual
A non-officer employee whose interest is solely through the individual’s employment status
An individual whose interest is solely through a right of inheritance
A creditor who would otherwise meet the definition of a beneficial owner solely through rights to payment

Generally, reporting companies must provide four pieces of information about each beneficial owner:

Name
Date of birth
Current residential address
Identification document (generally a passport or driver’s license)

When’s the deadline to file the BOI report?

Filing is simple, secure, and free of charge on the FinCEN website. Reporting companies must file their initial reports by the following deadlines, determined by FinCEN:

Existing companies: Reporting companies created or registered to do business in the United States before January 1, 2024 must file by January 1, 2025.
Newly created or registered companies: Reporting companies created or registered to do business in the United States in 2024 have 90 calendar days to file after receiving actual or public notice that their company’s creation or registration is effective.