Corporate Transparency Act: Beneficial Ownership
November 4, 2024 by Gordon Advisors
Deadline: 1/1/25
The Corporate Transparency Act (CTA) became effective January 1, 2024, and requires certain types of U.S. companies and foreign entities to report information about their beneficial owners—those who directly or indirectly own and control the company. Companies must report this information to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.
You can access all the information you need on the FinCEN Beneficial Ownership Information Reporting web page fincen.gov/boi. Be sure to check the site for updates.
Most clients can handle reporting themselves. However, clients with numerous legal entities may face administrative challenges and need to reach out to legal counsel. Some payroll companies are also offering the reporting service.
Whether your small business has been around for many years or if you are currently in the process of starting a small business or plan to start a business in the future, whatever type of business that may be, this requirement may apply to your business.
IMPORTANT DATES:
Effective Date of CTA: January 1, 2024, for all eligible U.S. companies and foreign companies operating in the U.S.
90-Day Deadline for New Entities Formed in 2024: New entities (LLCs, corporations, etc.) formed on or after January 1, 2024, and through December 31, 2024, have 90 days from the formation date (i.e., filing of Articles of Organization or Articles of Incorporation) to file an initial Beneficial Ownership Report with FinCEN.
30-Day Deadline for New Entities Formed on or After January 1, 2025: New entities (LLCs, corporations, etc.) formed on or after January 1, 2025, have 30 days from the formation date (i.e., filing of Articles of Organization or Articles of Incorporation) to file an initial Beneficial Ownership Report with FinCEN.
One-Year Deadline for Pre-Existing Entities: All pre-existing entities (LLCs, corporations, etc.) formed prior to January 1, 2024, must file an initial Beneficial Ownership Report with FinCEN by January 1, 2025.
30-Day Deadline for Amendments: All entities must update a previously filed Beneficial Ownership Report due to a change in information within 30 days from the date of change.
Civil & Criminal Penalties for Violations
Fines of $500 per day for failing to file a Beneficial Ownership Report or amendment. Individuals (responsible owners or officers) may also be fined up to $10,000 for each violation by each entity (Reporting Company) and imprisoned for up to two years for each felony conviction.
What You Should Do:
Review FinCEN’s Small Entity Compliance Guide and FAQs.
If you are required to report your company’s beneficial ownership information to FinCEN, you can do it yourself electronically through a secure filing system available on FinCEN’s BOI E-Filing website boiefiling.fincen.gov. There is no fee for submitting your beneficial ownership information report to FinCEN.
You can also have your attorney file it on your behalf. They may charge to file the report for you.
Please contact Gordon Advisors for any additional questions.
Here are a few resources we encourage every small business owner to review to gain a better understanding of their filing requirements:
- Brochure: An Introduction to Beneficial Ownership Information Reporting – fincen.gov/boi/quick-reference
- An Introduction to Beneficial Ownership Information Reporting Requirements – youtube.com/watch?v=nx48tPUbRK0
- Stay Informed With FinCEN Updates – service.govdelivery.com/accounts/USFINCEN/subscriber/new
- Five-Minute Demo: How to File a Beneficial Ownership Information (BOI) Report – youtube.com/watch?v=GydCvfbKxPw
In Michigan, you can access your company formation documents online at the Department of Licensing and Regulatory Affairs (LARA) website. Businesses formed in other states can go to that state’s Secretary of State website. Below is the link to search for your business in Michigan.
cofs.lara.state.mi.us/SearchApi/Search/Search