Beginning on January 1, 2024, many companies in the United States must report information about their beneficial owners (i.e., the individuals who ultimately own, or control the company). Companies must report the data to the Financial Crimes Enforcement Network (FinCEN), a bureau of the Treasury Department, through an electronic filing system. The reporting requirements for beneficial ownership information (BOI) are part of the Corporate Transparency Act.
REPORTING ENTITIES:
Generally, any corporation, limited liability company, or any other entity that is created by filing a document with a secretary of state or similar office under state or tribal laws or is formed under foreign law and registered to do business in the United States by filing a document with a secretary of state or similar office under state or tribal laws, is a reporting company that must disclose information regarding its beneficial owners and its company applicants to FinCEN under the Corporate Transparency Act.
However, there are exclusions for heavily regulated entities that already report such information to other federal agencies or companies with actual business activities that are not perceived as a high risk for money laundering. Additionally, the reporting requirements do not apply to an inactive entity.
BENEFICIAL OWNER:
A beneficial owner is an individual who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, either:
- exercises substantial control over the reporting company; or
- owns or controls at least 25 percent of the ownership interests of the reporting company.
COMPANY APPLICANT:
A company applicant is the individual who files documentation with a secretary of state or any similar office under state or Indian tribe law that creates the domestic reporting company.
Further, the individual primarily responsible for directing or controlling that filing by another individual is also a company applicant.
Filing deadlines for initial reports. Domestic reporting companies created or registered to do business in the United States and foreign reporting companies registered to do business in the United States before January 1, 2024, must file their initial report with FinCEN no later than January 1, 2025.
If your company was created or registered on or after January 1, 2025, it must file its initial beneficial ownership information report within 90 calendar days after receiving actual or public notice that its creation or registration is effective. Additionally, penalties may be imposed for failure to file.
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