News
Beneficial Ownership Information Report
2024-02-27 | by Gene B. Reynolds, CPA
Information & Filing Requirements
Beneficial Ownership Information Report
The Corporate Transparency Act (CTA), enacted by Congress on Jan. 1, 2021, as part of the National Defense Authorization Act for Fiscal Year 2021, P.L. 116-283, introduces a filing requirement for many entities beginning in January 2024. The purpose of the CTA is to increase transparency about who owns or controls an entity. Congress believes that illicit actors use U.S. entities to launder money for various illegal activities. The CTA is designed to combat this and make it easier for law enforcement to track criminal activity by requiring certain types of entities to file a beneficial ownership information report with Treasury’s Financial Crimes Enforcement Network (FinCEN).
When to file a Beneficial Ownership Information Report?
Entities established before January 1, 2024, have until January 1, 2025 to file.
Entities established on January 1, 2024 or after have 90 days from formation to filing.
Helpful Links:
- File the Report Here: BOI E-Filing System
Are Some Companies Exempt?
While 23 types of entities are exempt from the new BOI requirement, most entities are already required to file this information, such as public companies, banks, securities brokers, etc.
Special Note For Large Operating Companies (Gross Revenues $5 million or more): Please see page 19 in the link above. There is a 6-step checklist to see if you qualify for exemption.
What is beneficial ownership information?
Beneficial Ownership Information Reporting FAQs | FinCEN.gov
Beneficial ownership information refers to identifying information about the individuals who directly or indirectly own or control a company.
Who is a beneficial owner of a reporting company?
Beneficial Ownership Information Reporting FAQs | FinCEN.gov
A beneficial owner is an individual who either directly or indirectly: (1) exercises substantial control (see Question D.2) over the reporting company or (2) owns or controls at least 25% of the reporting company’s ownership interests.
What is substantial control?
Beneficial Ownership Information Reporting FAQs | FinCEN.gov
An individual can exercise substantial control over a reporting company in four different ways. If the individual falls into any of the categories below, the individual is exercising substantial control:
- The individual is a senior officer (the company’s president, chief financial officer, general counsel, chief executive officer, chief operating officer, or any other officer who performs a similar function).
- The individual has the authority to appoint or remove certain officers or a majority of directors (or similar body) of the reporting company.
- The individual is an important decision-maker for the reporting company.
- The individual has any other form of substantial control over the reporting company as explained further in FinCEN’s Small Entity Compliance Guide.
Please reach out to us with any questions about the Beneficial Ownership Information Report filing requirement.
Contact us by phone, email, or online today to discuss options specific to your business needs.
About the Author
Gene B. Reynolds, CPA
Gene is the Founder and President of Reynolds and Associates, a Houston-based CPA Firm. He has spent 42 years helping Houston entrepreneurs navigate their enterprises through both calm and stormy waters.