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 on or 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.

Note: Existing companies formed before January 1, 2024 do not include company applicant information in the BOI Report. The company applicant requirement does not apply to these existing companies.

(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 90 calendar days of forming.
• File updated reports within 30 calendar days of any change in information.
• File corrected reports within 30 calendar days of noticing any incorrect information in a previous report.