Beneficial Ownership Reporting Requirements: What You Need to Know
Stay Updated
This remains a dynamic situation. Business owners should visit FinCEN.gov/BOI webpage for the most current updates and revised instructions.
Effective Date and Purpose
Effective January 13, 2025, the Financial Crimes Enforcement Network (FinCEN) will implement new reporting requirements under the Corporate Transparency Act (CTA). These regulations enhance transparency and combat financial crimes by requiring certain businesses, known as “reporting companies,” to disclose beneficial ownership information (BOI) directly to FinCEN.
While we are unable to provide personalized advice for your business, we are committed to keeping our clients informed about regulatory changes that may affect them. We recommend consulting with your legal or tax professional for guidance. Our aim is to ensure you stay informed about these requirements and encourage your compliance.
Who Needs to Report?
Reporting companies include:
- Corporations, Limited Liability Companies (LLCs), Limited Partnerships (LPs), and other entities created by filing documentation with a state office.
Exceptions include:
- Sole proprietors, non-profits, general partnerships, municipalities, government authorities, and regulated entities like banks, insurance companies, and securities brokers.
To determine your specific reporting obligations, visit FinCEN.gov/BOI.
What Are the Reporting Deadlines?
1. Existing Entities (Created Before January 1, 2025): Reports must be submitted by January 13, 2025, due to a delay caused by a preliminary injunction.
2. New Entities (Created On or After January 1, 2025): Reports are due within 30 days of formation.
3. Entities Registered On or After December 3, 2025: Reports must be submitted within 21 days of the applicable deadline.
4. Updated Reports: Must be submitted within 30 days of any change to previously reported information.
5. Corrected Reports: Due within 30 days upon discovering inaccuracies in filed reports.
Reports are currently not required while the preliminary injunction issued in Texas Top Cop Shop, Inc. v. Garland remains in effect. Reporting requirements may resume based on future rulings.
What Information Must Be Reported?
For Reporting Companies:
- Full legal name, trade name(s), physical address, and Employer Identification Number (EIN).
For Beneficial Owners and Company Applicants:
- Full legal name, date of birth, physical address, and a copy of a non-expired government-issued ID.
Who Qualifies as a Beneficial Owner or Company Applicant?
Beneficial Owners: Individuals who:
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- Exercise substantial control over a reporting company, or
- Own or control at least 25% of its ownership interests.
Company Applicants:
- The person filing the formation documents or directing their preparation (for entities created on or after January 13, 2025).
How to File a Report
Reports must be submitted electronically using FinCEN’s secure online reporting system. Detailed instructions, forms, and FAQs are available at FinCEN.gov/BOI.
Why Is This Important?
The BOI reporting requirement serves multiple purposes:
- Preventing Financial Crimes: Transparency deters illegal activities like money laundering and terrorist financing.
- Protecting Businesses: Compliance reduces the risk of inadvertent involvement in financial crimes.
- Fostering Trust: Transparency builds confidence in the financial system and enhances your organization’s reputation.
Consequences of Non-Compliance
Failure to comply with BOI reporting requirements can have serious repercussions, including:
- Substantial Financial Penalties: Non-compliance may result in significant fines, which could impact your business's financial stability.
- Legal Risks: Businesses and their owners may face legal actions, leading to reputational damage and further financial consequences.
- Disruptions in Operations: Authorities may enforce measures that disrupt daily operations, affecting your ability to serve customers or meet business goals.
Need Assistance?
If you have questions about BOI reporting, we encourage you to:
- Visit FinCEN.gov for additional guidance.
- Contact the FinCEN Resource Center at 1-800-767-2825 or via email at FRC@fincen.gov.