The Corporate Transparency Act (CTA) came into effect on January 1, 2024, with the goal to help the US government combat financial crimes like tax fraud, money laundering, corruption, and even drug and human trafficking. In order to do so, this law requires all businesses operating in the US with an EIN to file a Beneficial Ownership Information Report (BOIR). Filing the BOIR would help ensure that company ownership structures and interests are clear and transparent for the CTA. The BOIR submitted will be filed with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) with the goal of promoting more accountability for businesses while deterring illegal and malicious activities.

Who May be Considered a Beneficial Owner?

A Beneficial Owner can be:

  • Individual(s) who directly or indirectly own at least 25% of a company.
  • A CEO, CFO, or other senior officers that have significant control over key decisions.
  • Someone who can remove or assign board members or senior officers.

Why Is Filing the BOIR Important for Businesses?

Filing the BOIR is not optional, but mandatory for most businesses. Although failing to file on time comes with penalties, accuracy matters too. Even if you file on time, incorrect or incomplete information can result in penalties including the following:

  • Criminal penalties: Up to two years in prison and fines up to $10,000, and/or
  • Civil penalties: $591 per day for each day you’re noncompliant.

Critical Filing Deadlines

  • Existing Businesses that were created before January 1, 2024, must file by January 1, 2025.
  • New Businesses that were created between January 1, 2024, and January 1, 2025, must file within 90 days of being formed.
  • New Businesses that are created after January 1, 2025, must file withing 30 days of being formed.
  • When making a Beneficial Owner change to your business, the updated report must also be filed within 30 days.

What’s Included in the BOIR?

The BOIR filed for your business must include details about the company and all its Beneficial Owners, such as the following:

  • For the company:
    • Legal name, trade names (if any), address, federal tax ID (EIN), and the jurisdiction or state of formation.
  • For all Beneficial Owners:
    • Full name, date of birth, address, ID details (like a driver’s license or passport), and ID picture.
  • For new businesses:
    • Information about the person who filed the company’s formation documents.

How to Simplify the Filing Process?

Filing can feel overwhelming, especially given the penalties for not filing or filing incorrectly, but it doesn’t have to be. Whether you work with your CPA, legal counsel, or file online yourself, staying compliant is manageable when you fully disclose your beneficial owner information.

It’s important to have a clear plan to ensure that you meet the important deadlines in order to avoid penalties. Please keep in mind that taking the time to make sure your BOIR is filed accurately is critical to protect yourself and your business.