The Corporate Transparency Act (CTA) was passed to improve business ownership transparency and reduce financial crimes including tax evasion, money laundering, and terrorism financing. Starting January 1, 2024, certain businesses are required to file beneficial ownership information (BOI) with FinCEN as part of their compliance obligations. Failure to comply with these requirements could result in significant penalties.
Who Are Beneficial Owners?
Any individual who directly or indirectly exercised substantial control over the reporting company or owns or controls at least 25% of its ownership interests is a beneficial owner.
Which Businesses Need to Report?
Businesses need to report if they are a:
- Domestic reporting company: A corporation, LLC, or any business entity created through filing a registration document with a secretary of state (or similar) office under the law of a state or Indian tribe
- Foreign reporting company: A corporation, LLC, or other entity formed under the law of a foreign country that filed a document tiwht the secretary of state or any similar office to register to do business in any U.S. state or tribal jurisdiction
Exemptions to Reporting
- Any business not registered as a separate legal entity are not required to report (this includes many sole proprietorships, general partnerships). There are 23 types of exempt entities, including publicly traded companies, non-profits, certain lard operation companies.
How to Report?
If you are required to report your company’s beneficial ownership information to FinCEN, you will do so electronically through a secure filing system available via FinCEN’s BOI E-Filing website (https://boiefiling.fincen.gov).
When to Report
An existing company (one that was formed before January 1, 2024) must file their report by January 1, 2025. Any reporting company created or registered on or after January 1, 2024, must file its initial BOI report within 90 days of its formation. Entities created or registered on or after January 1, 2025, must file its initial report within 30 days of its formation.
Confused or Need Help Reporting?
If you have questions about needing to report or would prefer not to complete the process yourself, please contact Redbud Tax Services.
We are here to help!
