On January 1, 2024, the Corporate Transparency Act (CTA) came into effect. Because the CTA includes the word “corporate,” you might not think it has anything to do with your small business, but think again.
The fact is, the CTA affects scores of people, including small business owners. This means that if you’re one, there’s a good chance that you’re required to submit a beneficial ownership information report.
Are you now worried that you’re possibly non-compliant? Then keep reading. This is everything you need to know about the beneficial ownership report for 2024.
What Is a Beneficial Ownership Report?
The Beneficial Ownership Information (BOI) Reporting Requirements fall under the CTA. Its purpose is to combat illegal activities like money laundering and tax evasion. This is achieved by requiring businesses to report key details about their beneficial owners.
What is a beneficial owner? It’s any individual who (in)directly owns/controls 25% or more of the company. It can also be someone who (in)directly exercises substantial control over the company; for example, it may be someone who has decision-making powers.
Who Must File a Beneficial Ownership Report?
Technically, all reporting companies have to file a report, including both domestic and foreign ones. This goes for Tribal jurisdiction companies too. Both corporations and limited liability companies (LLCs) have to file as well.
As far as exemptions go, large operating companies with over 20 full-time American employees may not have to file, especially if they have over $5 million in revenue and a physical US presence. Plus, trusts that aren’t formed and filed at the state level aren’t required to file.
Our comprehensive guide also has more information on which other company types are exempt, so be sure to check it out.
What Happens If You Don’t File a BOI Report?
There are serious consequences if you don’t file a BOI report on time. You may face a fine of $500 per day, with a maximum of a $10,000 fine. In addition, you may risk up to two years in prison; this penalty also applies if you provide false information.
Considering that the punishments are harsh, it’s in your best interest to file ASAP.
The BOI Reporting Requirements for 2024
First, let’s cover the deadlines so you aren’t late. All existing businesses must report their BOI by January 1st, 2025.
As for newly formed businesses (those created after January 1st, 2024), you must file within 90 days of formation (this will be reduced to 30 days in 2025, unless the law changes). If you haven’t actually started your company yet, then use our business registration service. Not only is it free (excluding state fees), but we also only charge $37 for filing the BOI report.
Are you choosing to file on your own? Then you’ll have to use the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) site. You can file by PDF, web, or system-to-system API; each has its own pros and cons, so read up before you choose a method.
For each beneficial owner, you must report their:
- Full legal name
- Date of birth
- Current residential or business address
- A unique identification number (like a driver’s license or passport number)
Also, you’ll have to report details about the applicant, which is the person who files the company’s formation documents. On top of that, you’ll need to fill out the reporting company information.
Lawsuits and Bils Against the CTA and BOI Reporting
Unsurprisingly, there are groups that are against this new regulation. As a result, there are several lawsuits and bills, which may change things in the future.
Here are some of the important ones you should know about.
National Small Business United v. Yellen
In this case, the court found that the CTA gave Congress too much authority, which makes the CTA unconstitutional. As a result, those who are part of National Small Business United (NSBU) don’t have to file.
However, the Treasury Department appealed the decision and there should be a hearing sometime mid-September 2024.
H.R. 4035
This is the “Protecting Small Business Information Act of 2023.” Essentially, the bill seeks to protect small businesses by delaying the effective date of the reporting requirements. It also ensures that their sensitive data is adequately protected from misuse.
H.R. 5119
This bill is also known as the “Protect Small Business and Prevent Illicit Financial Activity Act.” It reinstates the original two-year deadline for filing BOI reports if they existed before the CTA went into effect. In addition, it extends deadlines to 90 days for companies formed between January 1st, 2024, and January 1st, 2025.
H.R. 5119 also aims to prevent FinCEN from allowing companies to submit incomplete BOI reports if they claim they’re “unable to obtain” necessary ownership information.
H.R. 4187 / S. 4297
This bill may be the most interesting of them all. It’s also known as the “Repealing Big Brother Overreach Act” and aims to repeal the CTA completely. As a result, it’d eliminate BOI reporting too.
Get Up to Speed About Beneficial Ownership Report for 2024
If you’re a small business owner, then you should learn everything you can about your beneficial ownership report for 2024. Considering that it’s a very new thing you have to file, it can be difficult to navigate yourself.
This is why there are companies like Business Anywhere. You can utilize our knowledge and experience to get peace of mind about filing your BOI report.
Sign up with Business Anywhere now if you’d like expert help with your company. We can file your BOI report and provide a whole range of other services too.
