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With less than three months before the turn of the New Year, many U.S. corporate entities will be required to comply with the Corporate Transparency Act (“CTA”). The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has published the “Small Entity Compliance Guide” to assist small businesses in understanding the rules and if those businesses are required to file a beneficial ownership information (“BOI”) report to FinCEN.

In May 2023, we reported that FinCEN published its reporting requirements and key terms defined within the Corporate Transparency Act (click here to read article).

The Small Entity Compliance Guide describes each of the BOI reporting rule’s provisions, answers several questions small businesses may have around BOI reporting requirements, and provides interactive checklists, infographics, and other tools to assist businesses in complying with the BOI reporting rule. It also answers such questions as:

  • Does my company have to report its beneficial owners? (Is my company a reporting company or exempt?)
  • Who is a beneficial owner of my company?
  • Does my company have to report its company applicants?
  • What specific information does my company need to report?
  • When and how should my company file its initial BOI report?
  • What if there are changes to or inaccuracies in reported information?

The CTA requires a Reporting Company to file reports to identify the company’s owners and those who filed the documents creating or registering the company within the state. A Reporting Company will be required to report its legal name, any trade name or assumed name (DBA), its address, the jurisdiction in which it was formed or first registered, and its taxpayer identification number.

A Beneficial Owner and the Company Applicant (which can be up to two individuals) of a Reporting Company will be required to file a BOI Report consisting of the individual’s full legal name, birthdate, address, unique identifying number from a non-expired driver’s license, identification document, or U.S. passport, and an image of that identification document.

The CTA lists 23 exemptions, such as companies in heavily regulated industries, like federal and state credit unions, certain banks, insurance companies, and nonprofits. Also, large operating companies with at least 20 full-time employees, more than $5 million in gross receipts or sales, and an operating presence at a physical office within the United States are exempt.
Click here for the complete list.
The requirements become effective on January 1, 2024, and companies will be able to begin reporting beneficial ownership information to FinCEN at that time. FinCEN is expected to provide additional guidance on how to submit beneficial ownership information. Small businesses can continue to monitor FinCEN’s website for more information.

The department has already promised further clarification, and we will continue to monitor all compliance and reporting obligations released by FinCEN prior to the effective date of January 1, 2024.

It is important for business owners and leaders to be proactive in determining how FinCEN’s reporting requirements impact you and your operations. It is important to consult a professional if you have any questions.

Additional Resources around the CTA and BOI Reporting Rule:

About Sean Buckley: Adams and Reese Associate Sean Buckley practices in corporate services, real estate, and mergers and acquisitions. He advises clients with matters related to entity selection and formation, corporate governance, and real estate transactions to identify proactive solutions and to mitigate risks.