Beneficial Ownership Reporting Under the Corporate Transparency Act

Title LXIV of the Anti-Money Laundering Act, better known as the Corporate Transparency Act (or “CTA”), was passed by Congress in 2021, and went into effect on January 1st, 2024. The Act requires companies (called “Reporting Companies“) to report their beneficial owners. This post will explore when a report is necessary, what to include and and who to report to.

It’s important that all Reporting Companies answer the following two questions:

1. Is your company required to report, i.e. is your company indeed a Reporting Company, or is it exempt?
2. If your company is a Reporting Company, who are its Beneficial Owners? Such Beneficial Owners must be included in your company’s Beneficial Ownership Information Report (or “BOIR“)?

DO NOT rely on random information on the Internet, YouTube, TikTok or Instagram for BOIR information. Please go directly to the source [See FinCEN.gov/boi], consult with a business attorney, or use our free and anonymous expert system. There are substantial criminal and civil penalties if you do not get this right or miss the deadline.

Who is a Beneficial Owner?

The CTA defines a beneficial owner as individuals who own or control at least 25% of the ownership interest in a Reporting Company, or who otherwise exercise “substantial control” over a Reporting Company. This means a Reporting Company is required to report of Beneficial Ownership Information (or “BOI“) for not only prominent shareholders, but also individuals who are high in the chain of command, such as CEOs, directors or chairmen. These requirements are an “and/or”, meaning only one of the criteria has to be met in order for a report to be necessary. A CEO may not have any ownership of the company, but the CEO will still have to be reported as a beneficial owner due to the importance of that position.

What Must be Reported?

BOIR’s must include the following information about a Reporting Company’s beneficial owners:

• Full legal name ​
• Date of birth​
• Current residential address​
• A unique identifying number from an acceptable identification document ​(Passport, Driver’s License etc.)
• The jurisdiction that issued the acceptable identification document (What country, Indian tribe, state or other entity is the identification document from?)

We strongly encourage companies to (1) amend or update their formation or governing documents, to require Beneficial Owners to obtain (and maintain) individual FinCEN ID’s, with enforcement mechanisms including termination, revocation of ownership, etc, for non-compliance, and (2) use report Beneficial Owner’s FinCEN ID’s, instead of keeping track of all the above information.

When is the Initial BOIR Due?

All Reporting Companies formed prior to January 1st, 2024, have until January 1st, 2025, to submit their initial BOIR. All new Reporting Companies formed on January 1st, 2024, or after, have 90 days to submit their BOIR in 2024, and that 90-day window shortens to 30-days in 2025 and onward.

After a Reporting Company submits its initial BOIR, it is required to file updated reports within 30 days of any changes in circumstances to the company or any Beneficial Owners, to keep its BOI current with FinCEN.

Why is this Required?

These new requirements are a crucial change to that status quo for businesses. Failure to properly report beneficial ownership information can result in fines ($500/day) or even jail time. Because of this, it is always wise to consult a legal opinion for matters such as this.

Your Common Questions Answered

Question: Does this mean Anonymous LLC’s are no longer anonymous?
Answer: No, anonymity is still preserved. The BOIR is a private, secure database for the feds, who have always had this information anyway through the IRS and the banks. Ownership information Anonymous LLC’s are not publicly released, and this is not tied to the information available at the Secretary of State.

Question: I’m not doing anything with my company. Do I still have to report?
Answer: Probably. Use our FREE BOI Evaluation System to answer the question, “Does my company need to report BOI?”

Question: I’ve seen on the Internet, TikTok I think, where I can put a trust structure in place to eliminate the BOIR requirement for my company. Why aren’t you telling your clients about that?
Answer: We’re not telling our clients about this, because it’s false and misleading information that can get our clients fined or (possibly) sent to jail. Law 4 Small Business is a law firm, with attorneys, and therefore we’re subject to malpractice claims and have a duty to our clients to make recommendations in their best interest. Please be very careful where you get your advice on the CTA, BOI and BOIR reporting requirements. The penalties are very severe and costly. If you’re not talking to a law firm or attorney, please view what you’re told as suspect. To determine what our recommendation is for you, start with our FREE BOI Evaluation System. It’s anonymous and only takes 5-10 minutes.

Question: Who is responsible for reporting BOI, the company or its beneficial owners? What happens if a beneficial owner doesn’t want to release his or her private information to the company, so the company can report their BOI?
Answer: A Reporting Company is responsible for reporting its BOI in the BOIR. However, beneficial owners are required to submit their information to the Reporting Company. FinCEN hasn’t yet published guidelines on what Reporting Company should do, if a beneficial owner is not cooperating. We recommend a Reporting Company hire a competent business attorney ASAP, if a beneficial owner is not releasing his or her BOI to permit the company to submit its BOIR.

Question: Is this an annual report, or just a one-time thing? What happens when something changes? Does a Reporting Company need to file a new BOIR?
Answer: Reporting Companies must submit their initial BOIR within the deadlines we identified above in this blog article. If anything changes about the Reporting Company (i.e. it moves, it changes its name, it starts using a new DBA, etc) or if anything changes about any beneficial owners (i.e. someone gets married and changes their name, someone changes their primary residence, a photo ID used for the previous BOIR expires, a new employee with “substantial control” comes or goes, etc), your company will need to submit an updated BOIR. Unfortunately, you cannot change the one piece of information that has changed — you need to submit an entirely new BOIR, which means you need to get all the BOI information from all its beneficial owners again. And get this done within 30-days of the change that necessitated an updated BOIR. This can be a very laborious process, which is why we recommend our low-cost subscription service for BOIR updates.

Question: If my company was formed prior to 2024, but I dissolve my company prior to 2025, can I avoid submitting an initial BOIR?
Answer: Unfortunately not. FinCEN issued an update to its FAQ’s on July 8th, 2024 (Note C.13) indicating that “if a reporting company was created or registered on or after January 1, 2024, and subsequently ceased to exist, then it is required to report its beneficial ownership information to FinCEN—even if it ceased to exist before its initial beneficial ownership information report was due.“

Question: If and when I close my company, do I need to tell FinCEN that, too?
Answer: No. FinCEN issued an update to its FAQ’s on July 8th, 2024 (Note C.14) indicating that “if a reporting company files an initial beneficial ownership information report and then ceases to exist, then there is no requirement for the reporting company to file an additional report with FinCEN noting that the company has ceased to exist.“

Next Steps

Don’t fret. You’ve come to the right place. Law 4 Small Business provides the most advanced and cost-effect BOIR tools in the industry.

First, use our FREE expert system to determine whether (1) your company must report BOI, and if so (2) who are your company’s beneficial owners. Click this link to access our FREE BOI Evaluation System now. It only takes 5-10 minutes.

Second, we can help you with BOIR’s in two ways:

• We can file your BOIR for you.
• We have a low-cost subscription service, to take the hassle out of BOIR updates. (Link here soon)

Third, instead of filing BOIR, are you wanting to make a change to your company? We can help you in the following ways:

• Change the ownership structure of your company. This can be simple or complicated, depending on a variety of issues. We wrote a FREE Change Ownership expert system to help you understand how to go about doing this.

Forth and finally, frustrated by all of this and instead of learning everything by yourself, would you rather consult with a professionally licensed and specially trained attorney in all of this? Consider ordering a 30-minute attorney consult.

 Law 4 Small Business (L4SB). A little law now can save a lot later. A Slingshot company.