The Corporate Transparency Act imposes reporting requirements on small businesses that are operating within the United States. These small businesses must register with the Federal Crime Enforcement Network (“FinCEN”) and provide business and personal information. Businesses registered prior to January 1, 2024, have until January 1, 2025, to register. Businesses registered after January 1, 2024, have 90 days from their effective date to register.
Will my business be affected?
There are very few exemptions or exceptions to the reporting requirements, so it is likely that your business will be required to comply with this new law.
A company is required to register if it meets both of the following criteria:
- The company is a “business entity”. This includes limited liability companies (LLCs), corporations, or any other similar type of company that is “formed by the filing of a document with the Secretary of State, a similar state agency, or an Indian tribe.”
- Has EITHER:
- Fewer than 20 full-time employees, OR
- Less than $5 million in gross receipts or sales, as identified in the company’s US tax return.
What information about my business is required?
For each business, the following must be included in the report:
- Full legal name of the reporting company and any trade or DBA names
- Business address
- State of formation or registration
- IRS Taxpayer Identification Number (TIN), such as EIN
Will I be required to provide personal information?
Beyond information about the business itself, information about specific individuals within the business will also need to be reported. This includes personal information from the “beneficial owners” of the business, and, only for businesses created after January 1, 2024, the “company applicants” of the business.
Beneficial Owners
This includes any individual who:
- Owns or controls, either directly or indirectly, at least 25% of the business, OR
- Exercises “substantial control” over the company
A person who exercises “substantial control” can encompass a variety of different people in different positions including officers, decision-makers, individuals with authority, etc.
Only beneficial owners as of the time of filing will be included within the initial report. However, if beneficial owners change or alter as time goes on, your business report must be updated to reflect the change of beneficial owners.
Exemptions
The following individuals are exempt from reporting their information, even if they qualify as a Beneficial Owner:
- Minor children
- Nominee, intermediary, custodian, or agent
- Employee (please refer to page 30 of the Small Compliance Guide linked below for more information regarding whether you meet this exemption)
- Inheritor of a future interest
- Creditor
Company Applicants – ONLY for businesses formed on or after January 1, 2024
This includes individuals who are involved in filing the company’s formation paperwork. There must be at least one Company Applicant included in a business’s report, but there will be a maximum of two individuals:
- The individual who directly files the paperwork to form the company. This could include an attorney from Koesters Law Office.
- The individual who requested that the paperwork be filed to form the company. This is likely to be the individual named as statutory agent for the business or an individual who played a similar role.
What personal information will be provided?
Both the Beneficial Owners and the Company Applicants will need to provide the following information:
- Full legal name
- Date of birth
- For Beneficial Owners, residence address
For Company Applicants, business or residence address
- Unique identification number from an approved, non-expired government ID, including:
- A state-issued license
- A state/local/tribe-issued ID
- A U.S. or foreign passport
- A scan or photograph of the ID used in #4 above
Does the reporting requirement continue?
Yes, businesses will be required to update their reports if there is any change to the information submitted in their initial registration. Any updates must be submitted within 30 days of the change.
Examples of changes include a new business name, the removal or appointment of a member or officer, sales or transfers that alter which individuals meet the 25% ownership threshold, or changes to any Beneficial Owner’s information, such as a name or address change, or a change in their unique identifying number.
Are there exemptions to the reporting requirement?
Yes, there are very limited exemptions. To see if your business qualifies, please follow the links below.
Where do I find more information?
For general application questions – Beneficial Ownership Information Reporting | FinCEN.gov
For questions regarding small businesses – Small Business Resources | FinCEN.gov
To file online – BOI E-FILING (fincen.gov)
Can I contact Koesters Law Office for assistance?
Yes, we would be happy to answer any questions we can. Contact our office by July 1, 2024, so that we can best assist you in this process.
201 E. Vine Street, Coldwater, Ohio 45828
Phone: (419) 678-2378
Fax: (419) 678-8653
Email: info@koesterslaw.com