Yes, it’s real!

Starting January 1, 2024, the Corporate Transparency Act (CTA) mandates new reporting obligations for LLC owners and managers. It’s essential for anyone involved in managing or owning an LLC to understand these requirements to determine if their company must submit a Beneficial Ownership Information Report (BOIR) and to prepare for compliance if needed.

Business owners may handle filing of these new reports on their own or have Clarity Consulting Agency file it on their behalf.

What is a BOIR?

The CTA requires that entities report beneficial ownership information, which includes identifying details about individuals who own or control the company either directly or indirectly. This information is submitted to the Financial Crimes Enforcement Network (FinCEN) in what is called a Beneficial Ownership Information Report (BOIR).

Beneficial Ownership Rules for LLCs

Under the CTA, any entity that qualifies as a “reporting company” must file a BOIR. LLCs, as defined by the CTA, are considered reporting companies, meaning that most LLCs created in the United States will need to file a BOIR unless they qualify for one of the exemptions.

Exemptions from BOIR Filings

Yes, there are 23 categories of entities exempt from filing a BOIR. These generally include entities that are already heavily regulated and report to government agencies, such as public corporations, financial institutions, insurance companies, and tax-exempt entities. It’s important to note that most LLCs will not qualify for these exemptions.

Exemptions Based on LLC Size

An exemption is available based on the size of the LLC. Companies are exempt if they meet the following criteria: they employ more than 20 full-time employees in the U.S., have a physical office presence in the U.S., and have filed a federal income tax return for the previous year showing more than $5 million in gross receipts or sales.

Information Required in a BOIR

The BOIR must include comprehensive information about the LLC and its beneficial owners. This includes the legal name of the company, any trade names or DBAs, the principal business address, the jurisdiction where the LLC was formed, and the company’s taxpayer identification number.

For each beneficial owner (and for company applicants if the LLC was created on or after January 1, 2024), the report must include the individual’s legal name, date of birth, residential address (or business address for certain applicants), and an identifying number from a government-issued ID (such as a driver’s license, passport, or state ID), along with an image of the document.

Defining a Beneficial Owner

A beneficial owner is any individual who, directly or indirectly, exercises substantial control over the LLC or owns or controls at least 25% of the company’s ownership interests. Every LLC will have at least one beneficial owner, even if no single individual owns 25% of the LLC, as there will always be individuals who can make significant decisions for the company.

Exclusions from Beneficial Ownership

Certain individuals are excluded from being defined as beneficial owners. These include minors (though the parent or guardian’s information must be reported), intermediaries, custodians, or agents acting on another individual’s behalf, employees acting solely in their employment capacity, individuals with only a future interest through inheritance, and creditors.

Company Applicants

LLCs formed after January 1, 2024, must report information on company applicants. Up to two individuals may qualify as company applicants: the individual who directly files the document creating the LLC and the person primarily responsible for directing or controlling that filing. LLCs created before January 2024 have company applicants, but they are not required to report this information.

BOIR Filing Deadlines

For LLCs formed before January 1, 2024, the initial BOIR must be filed between January 1, 2024, and January 1, 2025. LLCs formed between January 1, 2024, and January 1, 2025, must file within 90 days of receiving public notice of their creation. LLCs formed after January 1, 2025, have 30 days to file their initial BOIR following public notice of their creation.

How and Where to File the BOIR

The BOIR is filed electronically through FinCEN’s filing system, available on the FinCEN website. The filing can be managed and submitted by Clarity Consulting Agency to help simplify the process for businesses. Get started immediately here:

Handling Changes in Beneficial Ownership

If there is a change in beneficial ownership or any changes to the information previously reported, the LLC must file an updated BOIR within 30 calendar days. This requirement does not extend to updates about company applicants for entities created before 2024. Clarity Consulting Agency can also assist with changes to filed forms.

Post-Filing Exemptions

If an LLC becomes eligible for an exemption after filing its BOIR, an updated report can be filed with FinCEN to indicate that the company is now exempt from the reporting requirement.

Correcting Mistakes in the BOIR

If an LLC discovers a mistake in its BOIR, it must file a corrected report within 30 days of becoming aware of the error.

Clarity Consulting Agency can also assist with changes to filed forms.

FinCEN Identifiers and Personal Information Concerns

If privacy is a concern, beneficial owners and company applicants can apply for a FinCEN Identifier, which allows them to submit their personal information directly to FinCEN. The LLC can then report the FinCEN Identifier instead of detailed personal information in the BOIR.

Obtaining a FinCEN Identifier

To obtain a FinCEN Identifier, beneficial owners and company applicants must submit an application electronically through FinCEN’s filing system. The FinCEN Identifier must be updated within 30 days of any changes to the information originally provided.

Public Access to Beneficial Ownership Information

The beneficial ownership information reported in a BOIR is not publicly accessible. FinCEN is authorized to disclose this information only to specific entities for certain authorized purposes, such as federal and state law enforcement agencies, the Treasury Department, and financial institutions with the company’s consent.

Penalties for Non-Compliance

Non-compliance with the CTA’s reporting requirements can result in severe penalties, including civil fines of up to $591 per day for each day the violation continues. Criminal penalties may include fines of up to $10,000, imprisonment for up to two years, or both.

The information provided is a summary of FinCEN’s BOI FAQs.

If you would like assistance with filing your BOI report accurately and timely, our filing fee is $149. To get started immediately, fill out this simple form and let’s hop on a call to discuss your business needs. Here at Clarity Consulting Agency, we are dedicated to keeping our clients up-to-date and compliant.