Back in 2021, congress passed the Corporate Transparency Act (CTA) as a response to concerns about money laundering and shell companies. As part of the act, and effective this year on January 1, 2024, is a new reporting requirement for Beneficial Ownership Information (BOI) reports to be filed with the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury. In essence, the CTA aims to make business ownership more transparent, and to do this will require another bureaucratic form, on top of the hundred others that business owners already have to fill out. But alas, it does need to be filled out, so below is a brief guide (not legal advice) on how to do it. Here’s the full guide too.

Who Needs to Report

Any company considered a “reporting company” which includes corporations, nonprofits, limited liability companies, limited partnerships, business trusts, and entities created filing with a secretary of state. There are some exemptions (which you can find here), but in general, public companies, banks and tax-exempt entities don’t need to file the form since they’re regulated by federal agencies.

What Information Needs to be Reported

FinCEN wants details about “Beneficial Owners”, which are individuals who have significant control over the business or own at least 25% of it. On the form (which you can find here), you’ll need to report the following about these Beneficial Owners:

– Full legal name

– Date of birth

– Residential (or sometimes business) physical commercial street address

– An image of an acceptable government-issued ID (e.g., a U.S. passport or state-issued driver’s license)

When to Report

Companies existing before Jan. 1, 2024, have until Jan. 1, 2025, to file. New companies must report within 90 days of creation (in 2024) or 30 days if formed after Jan. 1, 2025.

And if I don’t report

Surprise, surprise, charges and penalties. Non-compliance can result in fines up to $10,000 per violation and possible imprisonment. Failure to report updated beneficial ownership information to FinCEN or attempting to provide false or fraudulent beneficial ownership information include civil penalties of up to $500 for each day and imprisonment for up to two years.

Overall, this is a simple form that can be filed online to FinCEN (BOI E-FILING (fincen.gov)). It’s another administrative burden and it’s easy to miss. Don’t let it slip through the cracks. There’s no “street cred” in prison for not filing a BOI report.

To contact the author of this story:
Kelvin Lee at kelvin@hamiltoncapllc.com

To contact the editor responsible for this story:
Alonso Munoz at alonso@hamiltoncapllc.com