The Corporate Transparency Act is a law that’ll require millions of the nation’s smallest business entities to report beneficial owner information (BOI) to the Financial Crimes Enforcement Network (FinCEN) starting in 2024. (FinCEN is a bureau of the U.S. Department of the Treasury.)The law was enacted because “illicit actors” often set up small LLCs and corporations as shell companies, or fronts, to hide the identities of owners who are engaged in money laundering, financing terrorism, and other illegal activities.

The current suspension on enforcement of the Corporate Transparency Act is temporary. The Department of Justice is appealing the preliminary injunction. In the meantime, FinCEN is continuing to accept Beneficial Ownership filings.

According to FinCEN, the term beneficial owner includes any individual who, directly or indirectly, either

• Exercises substantial control over a reporting company (meaning they can make important decisions for the company)

or

• owns or controls at least 25 percent of the ownership interests

Small businesses that match these criteria can file BOI reports:

• Have 20 or fewer full-time employees and less than $5 million in sales

and

• Are LLCs, limited liability partnerships, corporations, business trusts, or other entities created by filing with a Secretary of State, tribal jurisdiction, or similar office
• Foreign LLCs and corporations that are registered to do business in any state or tribal jurisdiction

Organizations with more than 20 full-time employees and over $5 million in annual gross receipts are excluded from reporting requirements.

There are 23 entity types exempt from BOIR requirements:

1. Securities reporting issuer
2. Governmental authority
3. Bank
4. Credit union
5. Depository institution holding company
6. Money services business
7. Broker or dealer in securities
8. Securities exchange or clearing agency
9. Other Exchange Act registered entity
10. Investment company or investment adviser
11. Venture capital fund adviser
12. Insurance company
13. State-licensed insurance producer
14. Commodity Exchange Act registered entity
15. Accounting firm
16. Public utility
17. Financial market utility
18. Pooled investment vehicle
19. Tax-exempt entity
20. Entity assisting a tax-exempt entity

When there’s a change to your business or beneficial ownership information, you’re required to update FinCEN within 30 days of the change. Examples of a change include:

• The business address changes
• A beneficial owner moves and changes their address
• A beneficial owner gets married and changes their name
• A beneficial owner’s passport or driver’s license needs to be renewed
• A beneficial owner was previously a minor and comes of age

A federal court temporarily paused enforcement of the Corporate Transparency Act which requires businesses to report their beneficial ownership information to FinCEN. Although not mandatory, FinCEN is still accepting beneficial ownership filings.

We know this can be a confusing time for business owners navigating compliance, so we offer a free consultation as a guide to help you understand and file the Beneficial Ownership Information (BOI) form. 

Contact us at 1(888)300-4145

At Solid Ground Consultants, we’re staying on top of these developments to ensure small business owners have the resources they need to make informed decisions.