Under the Corporate Transparency Act enacted by Congress in 2019, a major deadline is looming for almost all entities operating in the United States. By January 1, 2025, any entity that is not exempt must file a Beneficial Ownership Interest Report with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
NOTE: the duty to file a BOI Report went into effect on January 1, 2024, for any entity created in this calendar year. There was a grace period until January 1,2025, for any entity already in existence prior to 2024 which is how we get to the looming deadline. Starting in 2025,any new entity required to report must do so within 30 days of incorporation or formation with a state entity.
To help navigate the BOI reporting process, we’ve created a handy video outlining the Why, What, Who, Where & How of BOI Reporting:
Here’s a summary:
Why: The CTA was enacted to combat the use of entities to obscure the identity of people committing financial crimes like money laundering and funding terrorism.
Bonus Why: Failure to comply with the reporting requirement under the CTA can result in severe civil and criminal liabilities.
What: Any entity that operates in the United States that does not qualify for an exemption, must report their Beneficial Ownership. The 23 types of entities that are exempt from registration all have one thing in common: they are heavily regulated by the government already so using them to commit crimes is (arguably) more difficult. (Alas, nobody in Congress must have watched “Breaking Bad”) In addition to entities like banks and insurance companies, a privately owned entity that has 20 or more employees, a permanent brick & mortar location and makes $5 Million in revenue a year is exempt.
Who: A Beneficial Owner is any individual who owns 25% of an entity (either directly, indirectly or in aggregate) or an individual who exercises substantial control over the entity’s direction or decision making.
Where: FinCEN website
How: Gather information on the entity and beneficial owners to file the report:
• Entity: name, registered tradenames and DBAs, EIN orother tax ID, principal address, and state in which the entity is primarily registered
• Beneficial Owners: names,addresses, dates of birth, and copies of a government issued identification and the numbers associated therewith (such as a passport ordriver’s license number).
A couple of extra tips:
FinCEN ID: If youhave a number of entities for which you have to file a BOI Report, you can setup a FinCEN ID to save time.
Company Applicant: For any entity in existence prior to January 1, 2024, the BOI Report does not have to include the Company Applicant. A Company Applicant is the individual who directly files the document that creates or registers the company.
We understand that this new BOI reporting requirement may feel burdensome or even be confusing, but compliance is crucial to avoid potential penalties. If you have any questions or need assistance with the reporting process, please do not hesitate to contact us.
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