The Corporate Transparency Act mandates that most small and privately held companies submit a document called a Beneficial Ownership Information report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network.

A federal law increasing reporting requirements for companies operating in the U.S. took effect on Jan. 1, 2024. The Corporate Transparency Act (CTA) applies to most small and privately held businesses. It is intended to root out potential bad actors who own corporate entities in the U.S.

The CTA requires additional information from corporations, limited liability companies, limited partnerships or any similar organization formed by filing the associated paperwork with a secretary of state. This includes foreign companies registered for business in a U.S. state.

The CTA affects small and privately held businesses, which were not previously mandated to report at this level. The act includes an exemption for a “large operating company” operating out of a physical U.S. office with 20 or more full-time employees and more than $5 million in gross receipts or sales listed on its previous year’s tax return.

Companies that fall within the CTA’s specifications are called “reporting companies.” The act mandates they submit a new document called a Beneficial Ownership Information (BOI) report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network.

The BOI report contains information about the reporting company, such as its legal name and any other names, address, employer identification number and jurisdiction of formation. It also includes any “beneficial owner’s” full legal name, date of birth, current residential address and a copy of their driver’s license or passport. Failure to report could result in fines of as much as $10,000.

Beneficial owners possess or substantially control 25% or more of the company. Current companies must submit their first BOI reports by Jan. 1, 2025.

1 Comment

  1. FinCEN Guidance offers an online solution for Beneficial Ownership Information Report (BOIR) filing, required for many small businesses, startups, entrepreneurs, LLCs, corporations, LPs, and LLPs. Simplifying compliance with the Financial Crimes Enforcement Network (FinCEN) regulations, FinCEN Guidance provides an intuitive, secure platform to complete and submit BOIR forms. The service is tailored for both single and multiple reporting companies, catering to small businesses and compliance professionals. FinCEN Guidance emphasizes ease of use, security, and accuracy in meeting legal requirements, enabling businesses to focus on their core operations without the stress of complex regulatory compliance.
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