Reporting Companies Under the Corporate Transparency Act

Effective January 1, 2024, all corporations, LLCs, and other entities formed in the United States or formed in a foreign country and registered to do business in a U.S state or territory by filing a document with a secretary of state or similar office, unless otherwise exempt, have to file a Beneficial Ownership Information report.

Who Has to Report?

Companies that must submit a BOI report are called “reporting companies.” Per the requirements, the reporting companies must obtain information from their beneficial owner(s) and report to FinCEN.

Disregarding your obligations to the beneficial ownership information reporting could cause you to face civil and criminal penalties.

Who is Exempt?

Twenty-three types of entities are exempt from the beneficial ownership report requirements, such as publicly traded companies, investment companies, banks, and credit unions, amongst others.

When do I Report?

Companies formed or registered before January 1, 2024, will have until January 1, 2025, to report.
Companies that meet the reporting criteria and were formed or registered on or after January 1, 2024, have 90 calendar days to file.
Companies that meet the reporting criteria and were formed or registered on or after January 1, 2025, have 30 calendar days to file.

Who Is a Beneficial Owner of a Reporting Company?

A beneficial owner is an individual who either directly or indirectly exercises substantial control over the reporting company or owns or controls at least 25% of the reporting company’s ownership interests.

What Is Substantial Control?

Individuals can exercise substantial control over a reporting company in four ways. If the individual falls into any of the categories below, the individual is exercising significant control:

The individual is a senior officer (the company’s president, chief financial officer, general counsel, chief executive officer, chief operating officer, or any other officer who performs a similar function).
The individual has the authority to appoint or remove certain officers or a majority of directors or a similar body of the reporting company.
The individual is an essential decision-maker for the reporting company.
The individual has any other form of substantial control over the reporting company.

Reporting Requirements for Companies in U.S. Territories

In addition to companies in the 50 states and the District of Columbia, a company that was formed or registered to do business by the filing of a document with a U.S. territory’s secretary of state or similar office and that does not qualify for any exemptions to the reporting requirements, is required to report beneficial ownership information. U.S. territories are the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, Guam, and the U.S. Virgin Islands.

BOI Information a Reporting Company Must Provide

A reporting company must provide the following personal, identifying information about each of its beneficial owners in its BOI report:

Legal name
Date of birth
Residence address (Must be U.S. street – No P.O. Boxes)
The identifying number and issuing jurisdiction from a driver’s license, passport, or another authorized document
Image of the document the number is from

Critical Information Checklist for Completing Reports

When filling out this report, ensure the following information has been provided before completion:

It’s legal name and any trade names, such as “doing business as” (d/b/a) or “trading as” (t/a) names.
A trade name, also known as a trading name or business name, is an alias adopted by companies that opt not to conduct business under their registered company name. Such an alternative name is commonly referred to as a “fictitious” business name. Registering this fictitious name with the appropriate government entity is a mandatory step.
The current street address of its principal place of business or, for reporting companies whose principal place of business is outside the United States, the current address from which the company conducts business in the United States.
Its jurisdiction of formation or registration
Its Taxpayer Identification Number (or, if a foreign reporting company has not been issued a TIN, then a tax identification number issued by a foreign jurisdiction and the name of the jurisdiction).

The Corporate Transparency Act

The Corporate Transparency Act was passed by the legislature to make it harder for bad actors to hide or benefit from ill-gotten gains through shell companies or other opaque ownership structures. Additionally, it will level the playing field for American businesses while keeping compliance burdens to an absolute minimum.