via U.S. Chamber of Commerce, Danielle Fallon-O'Leary , Contributor
How to File a Beneficial Ownership Information Report for Your Business. Under the Corporate Transparency Act, U.S. small businesses must file beneficial ownership information reports with the Department of the Treasury.
The Corporate Transparency Act (CTA), aimed at combating illicit financial activity, went into effect on January 1, 2024. Under the act, small businesses across the United States need to file beneficial ownership information reports, also known as corporate transparency reports.
Here’s everything small business owners need to know about filing a corporate transparency report.
What to know about beneficial ownership information reporting
The CTA was developed to increase transparency in business ownership and curtail the use of anonymous shell corporations for tax fraud, money laundering, and other illegal financial activity. Under this act, all businesses that fall under the definition of a reporting company must file a beneficial ownership information report (BOIR) with the Financial Crimes Enforcement Network (FinCEN).
A reporting company is any privately held company, whether domestic or foreign, registered to conduct business in the U.S. Publicly traded companies do not fall under the CTA, as they are subject to their own reporting requirements.
A beneficial owner is any individual who owns or controls at least 25% of an organization, or directly or indirectly exercises substantial control in any of the following roles:
- They serve as a senior officer, such as a president, CEO, or general counsel.
- They have the authority to appoint or remove senior officers, board members, or other similar roles.
- They make important decisions concerning the company’s business, finances, and/or structure.
Reporting requirements for small businesses
Eligible small businesses will need to report the following information about their companies:
- The full legal name of the company.
- The company’s business address; P.O. boxes or lawyer’s/adviser’s offices cannot be accepted.
- The state or Tribal jurisdiction where the company was formed or first registered.
- The taxpayer identification number and an identity document, such as a filed Articles of Incorporation or Organization.
Corporate transparency reports must also include the below information about any beneficial owners:
- Their full legal name and date of birth.
- Their home address; P.O. boxes or lawyer’s/adviser’s offices cannot be accepted.
- A photocopy of their U.S. driver’s license or passport.
How to file your corporate transparency report
As of January 1, 2024, FinCEN has begun accepting beneficial ownership information reports. Here are four steps you can take to prepare your corporate transparency report.
1. Determine whether your business is required to file.
Under the CTA, LLCs and corporations must file beneficial ownership information reports unless they qualify for an exemption. The following entities are exempt from reporting:
- Large operating companies; those with over 20 full-time employees in the U.S. and over $5 million in gross sales or receipts from U.S.-based sources.
- Inactive entities that were established on or before January 1, 2020, but are not in active business.
- Non-profits except ones that have their non-profit status pending with the IRS.
- Any other exemption from CTA reporting. If you aren't sure if your business falls under other CTA reporting exemptions, speak with a lawyer.
- Small businesses that are members of the National Small Business Association (NSBA) as of March 1, 2024, the date a federal court ruled in favor of NSBA’s constitutional challenge to CTA.
If your company is not an LLC or corporation, establish whether your business falls under the definition of a reporting company as defined above; a legal professional can also help you make this determination.
2. If your business qualifies, learn who the beneficial owners are.
List out any individuals who own or control 25% of your company, or otherwise exercise substantial control as defined above. If you are unsure if an individual meets the requirements of a beneficial owner, consult with a legal professional.
Once you have identified any beneficial owners, contact each to inform them that the CTA requires your business to report their personal information to FinCEN. Beneficial owners can choose to apply for a FinCEN Identifier and provide information to FinCEN directly. Otherwise, they can send the necessary information directly to you (the company) to be included in your business’s beneficial ownership information report.
3. Create a procedure.
Whether your beneficial owners are submitting their information via FinCEN or to your company, establish a process to keep all personal information organized, secure, and current. In addition to your initial report, you will need to file updated reports should there be a change in personal information or beneficial ownership.
4. File your report online.
All companies required to submit beneficial ownership information reports must file online via FinCEN. You can file one of two ways:
- Complete and upload a PDF. Download a copy of the blank BOIR form as a PDF here and fill in the information. They can then upload the completed PDF using this page. It should be noted that Adobe Acrobat is required to open and complete this PDF.
- Use FinCEN’s online platform. If you do not have Adobe Acrobat or simply wish to complete and file your BOIR within FinCEN’s platform, you can visit this page and follow the prompts. You will need to fill in information for and upload a photo of an identification document for each beneficial owner.
Reporting companies established before January 1, 2024, have until January 1, 2025, to file their initial corporate transparency reports. Companies established between January 1, 2024, and January 1, 2025, must file within 90 days from the notification or public announcement of their formation, whichever date comes first.
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Published February 13, 2024
The National Small Business Association (NSBA) won their lawsuit in the U.S. District Court for the Northern District of Alabama. FinCEN is enjoined from enforcing the Corporate Transparency Act (CTA) against small businesses that were national members of NSBA as of March 1, 2024. The federal government is appealing and other small business organizations have filed suit, including the National Federation of Independent Business (NFIB). The U.S. Chamber of Commerce is not party to any litigation.
Legislation: The U.S. Chamber of Commerce supports legislation that would give small businesses more time to file Beneficial Ownership Information Reports. Also, the Chamber is working with Congress on legislation that would prevent duplicative reporting. For instance, when a small business owner files their Beneficial Ownership Information Report and then goes into a bank to open up an account, the bank should have access to the report so the small business owner does not have to fill out the same report for the same purpose (to prevent money laundering).