The Corporate Transparency Act: Short Instructions for EXISTING Businesses

by | Business Law, Legal Advice

A business established before January 1, 2024, must provide information regarding the business and its beneficial owners by January 1, 2025 to comply with the Corporate Transparency Act.

Does My Business Meet An Exemption?

There are 23 types of companies that are exempt from the BOI reporting requirements. To see if your company is exempt from the BOI reporting, please see the table summary of the 23 exemptions provided by FinCEN.

When Do I Need To Report?

Reporting companies that are in existence before the effective date of January 1, 2024, must file their initial BOI reports by January 1, 2025. Failure to meet the deadline for filing can result in significant fines of up to $500 per day until the violation is remedied.

After your initial filing, be aware that BOI reporting is not an annual requirement. A report only needs to be submitted once, unless the filer needs to update or correct information.

What Do I Need To Report?

All reporting companies must provide their legal name and trademarks, as well as their current U.S. address, which could be either the address of its main business site or, for foreign-based companies, their U.S. operational location. You’ll also need to provide a taxpayer identification number and specify the jurisdiction where they were formed or registered.

You’ll be expected to provide information about all Beneficial Owners of the business.

Because your company was formed before January 1, 2024, you are not required to report the Company Applicants.

Please see the list of items required for the BOI report here.

What do I File?

You’ll need to collect the following information to complete the report properly.

Information about the Company Itself:

  1. The Company’s legal name
  2. Any trade names, “doing business as” (d/b/a), or “trading as” (t/a) names
  3. The current street address of its principal place of business if that address is in the United States (for example, a U.S. reporting company’s headquarters), or, for reporting companies whose principal place of business is outside the United States, the current address from which the company conducts business in the United States (for example, a foreign reporting company’s U.S. headquarters)
  4. Its jurisdiction of formation or registration
  5. Its Taxpayer Identification Number (or, if a foreign reporting company has not been issued a TIN, a tax identification number issued by a foreign jurisdiction and the name of the jurisdiction)

Information about the Beneficial Owners of the Company:

  1. The individual’s name;
  2. The individual’s Date of birth;
  3. The individual’s  Residential Address;
  4. An identifying number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of the identification document; and
  5. an image of the identification document used to obtain the identifying number in item 4.

Please see the full list of items required for the BOI report here.

What If Things Change?

Should any of the initial reported information change or a beneficial ownership interest be sold or transferred, the company must report this information to FinCEN within 30 days of the change or face the potential of having the penalties described above imposed. Changes include reporting a beneficial owner’s change of address or name, a new passport number when a passport is replaced or renewed, or providing a copy of a renewed driver’s license.

You may be surprised by some requirements for updated filings. For instance, if a beneficial owner changes their address, legally changes their name due to marriage or divorce, or obtains a new driver’s license, it may necessitate an update to a company’s BOI report. Operational changes or a new delegation of authority could also qualify.

Where Can Business Owners Get Help with their Beneficial Ownership Information Reports?

Companies may opt to file their own BOI reports or with the assistance of a knowledgeable advisor.

 

What Happens if I Fail To Report?

Failure to meet the deadline for filing and timely updating any changed information to FinCEN can result in significant fines of up to $500 per day until the violation is remedied, or if criminal charges are brought, fines of up to $10,000 and/or two years imprisonment. These penalties can be imposed against the beneficial owner, the entity, and/or the person completing the report.

Where Can I Learn More?

To learn more about the BOI reporting and its requirements, please visit the FinCEN website and thoroughly review the Small Business Compliance Guide.

You can also reach out to our qualified and experienced team. We would be happy to speak with you about BOI reporting for your small business.