The Corporate Transparency Act

What Small Businesses Need to Know

As of January 1, 2024, most small businesses in the United States (now classified as “reporting companies”) will be required to submit reports and updates to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) that disclose specific company and beneficial ownership information along with identifying the person(s) submitting the reports (“company applicants” such as one of the attorneys from Roberts Law, PLLC).

What is the Purpose of the Corporate Transparency Act?

Congress enacted the Corporate Transparency Act (CTA) in an effort to create transparency in entity structures and ownership and combat money laundering, tax fraud, and other illicit activities done through the use of shell companies or other opaque ownership structures.

What is a Corporate Transparency Act report (BOI report) and who has access?

Corporate Transparency reports are referred to by FinCEN as “beneficial ownership interest” (BOI) reports. The BOI reports populate a new federal government database called the Beneficial Ownership Secure System (BOSS) and provide information to federal and state agencies engaged in national security, intelligence, and law enforcement (with court order), financial institutions (with company consent), government regulators of financial institutions, and certain foreign authorities requesting information through a U.S. agency.

Who is required to file a corporate BOI report?

Every corporation, limited liability company, or other entity created by filing a document with a Secretary of State (e.g., the Florida Division of Corporations (sunbiz.org)) is required to file a BOI report unless it qualifies for an exception. Such non-exempt entities are referred to as “domestic reporting companies.” Of note, certain entities created in foreign countries and registered to do business in the United States are also required to file BOI reports (and are referred to as “foreign reporting companies”).

Who is exempt from filing a BOI report?

There are 23 categories of entities that are exempt, most of which apply to entities that are already subject to substantial state and/or federal regulation (for example, publicly traded companies and other entities that file reports with the SEC, banks, credit unions, securities brokers and dealers, tax-exempt entities, insurance companies, public utilities, accounting firms, etc.).

The primary exemption to be aware of is what’s called the “large operating company” exemption, which applies to an entity that (1) employs more than 20 full-time employees in the U.S.; (2) has an operating presence at a physical office within the U.S.; (3) and has filed a federal income tax or information return for the previous year demonstrating more than $5 million in domestic gross receipts or sales.

When do BOI reports need to be filed with FinCEN?

Companies in existence before January 1, 2024, that qualify as reporting companies under the CTA have until December 31, 2024, to file their initial BOI reports with FinCEN.

Companies formed, created, or registered after January 1, 2024, that are required to submit BOI reports will have ninety (90) calendar days from the date of receiving actual or public notice of their creation or registration becoming effective to file their initial BOI Report.

Companies formed, created, or registered after January 1, 2025, that are required to submit BOI reports will have thirty (30) calendar days from the date of receiving actual or public notice of their creation or registration becoming effective to file their initial BOI Report.

Is there a requirement to update the BOI report information?

Yes. If the information for the company or beneficial owners changes, such as a change in who the beneficial owners are (for example, after a sale of part or all of the business interest) or the specific information reported for any particular beneficial owner (such as a change in their address or change of name due to marriage or divorce), the reporting company or beneficial owner must file an updated report within thirty (30) calendar days of the change. When there is a change based on the death of a beneficial owner, the updated BOI report with the information identifying the new beneficial owner(s) will be due within thirty (30) calendar days of a transfer or final settlement of the estate.

Where can you find more information about beneficial ownership and FinCEN reporting?

• The Corporate Transparency Act is Here: Is Your Business Ready?

Roberts Law, PLLC assists businesses with the issues surrounding filing for compliance with the Corporate Transparency Act. We assist reporting companies with filing their required BOI reports and updates and serve as a company applicant. To inquire about this service, please submit your contact information and company name in the contact form below.