The CTA is federal legislation in the United States aimed at enhancing corporate transparency by requiring certain entities to disclose their beneficial ownership information to the U.S. Department of the Treasury.
Businesses that intentionally furnish inaccurate information (including a falsified or fraudulent identification photograph or document) or fail to report by the filing deadline may be subject to civil penalties imposed by the Board of Investigations (BOI), amounting to a maximum of $500 per day for each ongoing or unresolved violation. Furthermore, they may incur fines of up to $10,000 and/or be liable for a maximum imprisonment term of 2 years.
Important Reporting Requirements
- All active companies created piror to Jan 1, 2020 are required to report
- All Active and Inactive companies created after Jan 1, 2020 are required to report
- Companies created after Jan 1, 2024 have 90 days to report
- Unsure if your company is required to file? Take the Compliance Assessment below:
A guide to understanding BOI Reporting
An overview of reporting on beneficial ownership information, this introduces the process where entities disclose details about those who ultimately own or control them. The aim is to enhance financial system integrity by preventing illicit use of shell companies for money laundering or asset concealment.
Download BOI Info Reporting
Frequent Asked Questions
Q2. What is “Beneficial Ownership Information Reporting,” and does it apply to you?
Beneficial Ownership Information (“BOI”) reporting is a new federal requirement that applies to an estimated 30 million businesses in the United States. If your business is an entity filed with a state – whether it is a corporation, limited liability company, limited liability partnership, or professional corporation - it probably applies to you. Penalties for willful noncompliance can result in criminal and civil penalties of $500 per day (up to $10,000) and up to two years of jail time.
Q3. What is the Purpose of BOI Reporting?
The stated purpose of BOI reporting is to assist the federal government in cracking down on fraudulent and other criminal behavior. BOI reporting is a requirement created by the Corporate Transparency Act (“CTA”) which arms the federal government – specifically the Financial Crimes Enforcement Network (“FinCEN”) – with tools to pursue anonymous shell companies used by money launderers.
Q4. What is a "Reporting Company"?
A “Reporting Company” is any entity subject to BOI reporting requirements, which is the vast majority of small businesses. There are 23 exceptions including, but not limited to banks, insurance companies, public utilities, inactive entities, large businesses that employee more than 20 employees and had more than $5,000,000 in gross sales in the prior year, and more. However, most small businesses will not qualify for an exception.
Q5. What is a "Beneficial Owner"?
The BOI reporting form seeks information regarding who actually owns and/or controls the entity, or who is a “Beneficial Owner.” A Beneficial Owner is an individual who either directly or indirectly: (1) exercises substantial control over the reporting company, or (2) owns or controls at least 25% of the reporting company’s ownership interests.
Q6. Are inactive or dissolved companies required to file?
If you company was created prior to Jan 1, 2020 and is no longer active you are not required to file. If your company was created on Jan 1, 2020 or after regardless if it's no longer an active company, you are required to file a BOI Report.
Q7. When do you have to file your BOI report?
If your company is created on or after January 1, 2024 but before January 1, 2025, you must file your BOI report within 90 days of creation. If your entity was formed before January 1, 2024, you must file your BOI report before January 1, 2025. If your entity is formed after January 1, 2025, you must file your BOI report within 30 days of filing. If there is a change in the reported information, the changes must be reported within 30 days of those changes occurring (for example, if you sell your interest in a company).
Q8. What information is required to be reported under the Corporate Transparency Act?
Reporting Companies must report the following information about its Beneficial Owners and Company Applicants: name, address, date of birth, an identifying number from an identification document as well as a photo of the same (passport or driver’s license are the most common), the company’s legal name, any trade names, the current street address of the company, the filing jurisdiction (the state you filed in), and your EIN number or other tax ID number.