A Quick Breakdown of FinCEN’s Small Entity Compliance Guide

Understanding the complexities of the Corporate Transparency Act and Beneficial Ownership Information Reporting requirements can be daunting. This breakdown simplifies FinCEN’s 56-page Small Entity Compliance Guide into an easy-to-understand summary, providing you with the key points you need.

(1) Determining Reporting Obligations:

Most entities in the U.S. need to meet the BOI reporting requirements. 

• Domestic companies formed by submitting a state filing need to submit BOI Reports. This includes: LLCs, corporations and partnerships. 
• Foreign entities that are registered to do business in the U.S. also need to report.
• 23 types of businesses are exempt from filing BOI Reports. These are mostly large companies or publicly traded companies. 

(2) Identifying Beneficial Owners:

Entities need to report information about their significant owners and substantial control parties.

• A beneficial owner has at least 25% ownership in a reporting company.
• Anyone who has substantial control over important company decisions also needs to be reported. These individuals are called “control parties”. 
• Beneficial owners can have direct ownership, like corporate stock, or indirect ownership like options or future arrangements.

(3) Reporting Company Applicants:

New reporting companies formed in 2024 need to disclose the individuals most responsible for having the entity formed.

• • Reporting companies created after January 1, 2024 need to report two company applicants.
  • Company Applicant 1 –  the person most responsible for having the company formed. 
  • Company Applicant 2-  the person who submitted the formation documents to the state.

(4) What Specific Information is Reported:

• Company Information – legal name, state of formation, principal business address in the U.S., tax ID number, all trade names and DBAs.

• Individual Information – full name, current residential address, date of birth, image of a valid ID document.

• Individuals can obtain a unique FinCEN identifier to use when submitting BOI reports.

(5) When and How to File BOI Reports:

BOI reports need to be submitted through FinCEN’s online filing system before the state deadlines.

• Entities created before January 1, 2024 – File initial reports before January 1, 2025
• Entities created after January 1, 2024 – File initial reports within 30 days of forming.
• File updated reports within 30 days of any change in information.
• File corrected reports within 30 days of noticing any incorrect information in a previous report.