Latest news and information about FinCEN beneficial ownership information reporting and the Corporate Transparency Act.

Find out if your business is required to file a beneficial ownership report.

What business owners need to know about Beneficial Ownership Information Reporting

Nearly every small business in the U.S. must submit a “Beneficial Ownership Information Report” or BOI report to an organization called FinCEN in 2024. This is a new rule under the Corporate Transparency Act (CTA). FinCEN operates under the U.S. Department of the Treasury, the same department which enforces other business requirements such as tax returns. It is critical to understand that BOI reports are not optional in 2024. If your business does not file a report or submits false information, you could be fined up to $10,000 or even go to jail for up to two years.

The United States hosts millions of registered companies, but very few states or territories mandate them to reveal beneficial ownership details about the individuals who control or own these entities. This transparency deficiency provides a haven for illicit actors, including criminals and corrupt officials, who leverage this loophole to conceal their identities and launder illegal funds through the U.S. using shell and front companies. Recognizing this issue, in 2021, the U.S. Congress – with support from both political parties – enacted the Corporate Transparency Act (CTA) to mitigate the problem. The CTA compels most U.S. companies to provide beneficial ownership details to the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). Under rigorous safeguards and controls, FinCEN will only disclose the submitted beneficial ownership data in scenarios related to criminal investigations or research by financial institutions.

Your company’s Beneficial Ownership Information (BOI) report will submit a list of all “beneficial owners” associated with your business to FinCEN. Your list of beneficial owners must include any individual who meets either of these two criteria: (1) those who directly or indirectly hold a stake of 25 percent or more in the company’s “ownership interests,” or (2) those who wield “substantial control” over the company, whether directly or indirectly. It is paramount to understand that the definition of “beneficial owner” extends beyond just the legal entity owners. It also includes individuals who contribute significantly to the entity’s operation, even without holding equity. Every beneficial owner will need to provide their name, residential address, date of birth, and a government-issued identification document. You will also need to provide information about your business, such as its legal entity name, date and location of formation, primary operations address, and any DBA names. If your entity was created after 2024 with help from a third party, such as a law firm, you will also need to include their information in the report.

An initial report is the first report filed by your business to comply with the new law. Initial reports must be filed before the end of 2024 for any business formed before January 1st, 2024. For new businesses formed after January 1st, 2024, you will have 30 days to submit your initial report. Any mistakes on your report will require filing an updated report within 30 days to correct the error. In addition to initial reports, FinCEN requires companies to file updated reports within 30 days if any report information changes. Changes that trigger updated reports can be as mundane as an officer changing their home address, making compliance monitoring critical to avoid penalties.

Law firms specializing in corporate law, compliance, or formations should be able to help you file your beneficial ownership reports to FinCEN; however, many are not yet familiar with the new law’s nuances. Complex regulations make it difficult to complete BOI reports with 100% accuracy. Consulting a specialized attorney will save time and mitigate liability. You can find a list of specialized firms for Corporate Transparency Act compliance on FincenList.com

Unless your business employs over 21 or more full-time employees AND generates annual sales exceeding $5 million USD, it’s highly likely that you need to submit a BOI report to prevent potential penalties. There are also two dozen other exemptions for companies that operate in highly regulated industries. To find out if your company is exempt from filing, we recommend using our company check tool, which will let you know if you need to file a report after 3 simple questions

What information needs to be provided in your company’s beneficial ownership information report?

Your company’s Beneficial Ownership Information (BOI) report will submit a list of all “beneficial owners” associated with your business to FinCEN. Your list of beneficial owners must include any individual who meets either of these two criteria: (1) those who directly or indirectly hold a stake of 25 percent or more in the company’s “ownership interests,” or (2) those who wield “substantial control” over the company, whether directly or indirectly. It is paramount to understand that the definition of “beneficial owner” extends beyond just the legal entity owners. It also includes individuals who contribute significantly to the entity’s operation, even without holding equity. Every beneficial owner will need to provide their name, residential address, date of birth, and a government-issued identification document. You will also need to provide information about your business, such as its legal entity name, date and location of formation, primary operations address, and any DBA names. If your entity was created after 2024 with help from a third party, such as a law firm, you will also need to include their information in the report.

What kind of law firm can help my company file a beneficial ownership report?

Law firms specializing in corporate law, compliance, or formations should be able to help you file your beneficial ownership reports to FinCEN; however, many are not yet familiar with the new law’s nuances. Complex regulations make it difficult to complete BOI reports with 100% accuracy. Consulting a specialized attorney will save time and mitigate liability. You can find a list of specialized firms for Corporate Transparency Act compliance on FincenList.com

Why do businesses need to provide beneficial ownership information to FinCEN in 2024 and beyond?

The United States hosts millions of registered companies, but very few states or territories mandate them to reveal beneficial ownership details about the individuals who control or own these entities. This transparency deficiency provides a haven for illicit actors, including criminals and corrupt officials, who leverage this loophole to conceal their identities and launder illegal funds through the U.S. using shell and front companies. Recognizing this issue, in 2021, the U.S. Congress – with support from both political parties – enacted the Corporate Transparency Act (CTA) to mitigate the problem. The CTA compels most U.S. companies to provide beneficial ownership details to the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). Under rigorous safeguards and controls, FinCEN will only disclose the submitted beneficial ownership data in scenarios related to criminal investigations or research by financial institutions.

Is my company exempt from filing a beneficial ownership report?

Unless your business employs over 21 or more full-time employees AND generates annual sales exceeding $5 million USD, it’s highly likely that you need to submit a BOI report to prevent potential penalties. There are also two dozen other exemptions for companies that operate in highly regulated industries. To find out if your company is exempt from filing, we recommend using our company checker tool, which will let you know if you need to file a report after 3 simple questions

What is the difference between an initial BOI report, corrected BOI report, and updated BOI report?

An initial report is the first report filed by your business to comply with the new law. Initial reports must be filed before the end of 2024 for any business formed before January 1st, 2024. For new businesses formed after January 1st, 2024, you will have 30 days to submit your initial report. Any mistakes on your report will require filing an updated report within 30 days to correct the error. In addition to initial reports, FinCEN requires companies to file updated reports within 30 days if any report information changes. Changes that trigger updated reports can be as mundane as an officer changing their home address, making compliance monitoring critical to avoid penalties.

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Law and accounting firms need to prepare for the Corporate Transparency Act 2024 deadlines

The Corporate Transparency Act’s beneficial ownership reports will affect almost every small business and the legal services industry needs to be prepared to support small business owners across the U.S. Complicated filing regulations in FinCEN’s 60+ page documents will make legal and accounting firms essential to helping business owners navigate this complexity.

32
MILLION

In 2024, around 32 million companies across the United States will have a mandatory obligation to submit an initial report on their beneficial ownership.

12.8
MILLION

Estimated U.S. companies will seek the assistance of law or accounting firms to help file their initial Beneficial Ownership Information (BOI) report in 2024.

$7.6
BILLION USD

Estimated law and accounting industry revenue generated from corporate transparency act initial report filings in just in 2024 alone.

$2.3
BILLION USD

Estimated annual recurring law and accounting industry revenue generated  from updated corporate transparency act reports in 2025 and beyond.

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