Title LXIV of the Anti-Money Laundering Act, better known as the Corporate Transparency Act (or “CTA”), was passed by Congress in 2021. Going into effect on January 1st, 2024 the act will require companies (called “Reporting Companies”) to report their beneficial owners. This post will explore when a report is necessary, what to include and and who to report to.

It’s important that all Reporting Companies answer the following two questions:

  1. Is your company required to report, i.e. is a Reporting Company, or does is it exempt?
  2. If your company is a Reporting Company, who are its Beneficial Owners that the company is required to include in its BOIR?

Who

The CTA defines a beneficial owner as individuals who own or control at least 25% of the ownership interest in a Reporting Company, or who otherwise exercise “substantial control” over a Reporting Company. This means a Reporting Company is required to report of Beneficial Ownership Information (or “BOI”) for not only prominent shareholders, but also individuals who are high in the chain of command, such as CEOs, directors or chairmen. These requirements are an “and/or”, meaning only one of the criteria has to be met in order for a report to be necessary. A CEO may not have any ownership of the company, but the CEO will still have to be reported as a beneficial owner due to the importance of that position.

What

BOIR’s must include the following information about a Reporting Company’s beneficial owners:

  • Full legal name ​
  • Date of birth​
  • Current residential address​
  • A unique identifying number from an acceptable identification document ​(Passport, Driver’s License etc.)
  • The jurisdiction that issued the acceptable identification document (What country, Indian tribe, state or other entity is the identification document from?)

When

All Reporting Companies formed prior to January 1st, 2024, have until January 1st, 2025, to submit their initial Beneficial Ownership Information report (or “BOIR”). All new Reporting Companies formed on January 1st, 2024, or after, have 90 days to submit their BOIR in 2024, and that 90-day window shortens to 30-days in 2025 and onward.

After a Reporting Company submits its initial BOIR, it is required to file any updated within 30 days of any changes in circumstances to keep its BOI current with FinCEN.

Why

These new requirements are a crucial change to that status quo for businesses. Failure to properly report beneficial ownership information can result in fines ($500/day) or even jail time. Because of this, it is always wise to consult a legal opinion for matters such as this.

Your Common Questions Answered

Question: Does this mean Anonymous LLC’s are no longer anonymous?
Answer: No, anonymity is still preserved. The BOIR is a private, secure database for the feds, who have always had this information anyway through the IRS and the banks. Ownership information Anonymous LLC’s are not publicly released, and this is not tied to the information available at the Secretary of State.

Question: I’m not doing anything with my company. Do I still have to report?
Answer: Probably. Use our FREE BOI Evaluation System to answer the question, “Does my company need to report BOI?”

Question: I’ve seen on the Internet, TikTok I think, where I can put a trust structure in place to eliminate the BOIR requirement for my company. Why aren’t you telling your clients about that?
Answer: We’re not telling our clients about this, because it’s false and misleading information that can get our clients fined or worse, sent to jail. Law 4 Small Business is a law firm, with attorneys, and therefore we’re subject to malpractice claims and have a duty to our clients to make recommendations in their best interest. Please be very careful where you get your advice on the CTA, BOI and BOIR reporting requirements. The penalties are very severe and costly. If you’re not talking to a law firm or attorney, please view what you’re told as suspect. To determine what our recommendation is for you, start with our FREE BOI Evaluation System.

Question: Who is responsible for reporting BOI, the company or its beneficial owners? What happens if a beneficial owner doesn’t want to release his or her private information to the company, so the company can report their BOI?
Answer: A Reporting Company is responsible for reporting its BOI in the BOIR. However, beneficial owners are required to submit their information to the Reporting Company. FinCEN hasn’t yet published guidelines on what Reporting Company should do, if a beneficial owner is not cooperating. We recommend a Reporting Company hire a competent business attorney ASAP, if a beneficial owner is not releasing his or her BOI to permit the company to submit its BOIR.

Question: Is this an annual report, or just a one-time thing? What happens when something changes? Does a Reporting Company need to file a new BOIR?
Answer: Reporting Companies must submit their initial BOIR within the deadlines we identified above in this blog article. If anything changes about the Reporting Company (i.e. it moves, it changes its name, it starts using a new DBA, etc) or if anything changes about any beneficial owners (i.e. someone gets married and changes their name, someone changes their primary residence, a photo ID used for the previous BOIR expires, a new employee with “substantial control” comes or goes, etc), your company will need to submit an updated BOIR. Unfortunately, you cannot change the one piece of information that has changed — you need to submit an entirely new BOIR, which means you need to get all the BOI information from all its beneficial owners again. And get this done within 30-days of the change that necessitated an updated BOIR. This can be a very laborious process, which is why we recommend our low-cost subscription service for BOIR updates.

Next Steps

Don’t fret. You’ve come to the right place. Law 4 Small Business provides the most advanced and cost-effect BOIR tools in the industry.

First, use our FREE expert system to determine whether (1) your company must report BOI, and if so (2) who are your company’s beneficial owners. Click this link to access our FREE BOI Evaluation System.

Second, we can help you with BOIR’s in two ways:

  • We can file your BOIR for you.
  • We have a low-cost subscription service, to take the hassle out of BOIR updates. (Link here soon)

Third, instead of filing BOIR, are you wanting to make a change to your company? We can help you in the following ways:

Forth and finally, frustrated by all of this and instead of learning everything by yourself, would you rather consult with a professionally licensed and specially trained attorney in all of this? Consider ordering a 30-minute attorney consult.

 Law 4 Small Business (L4SB). A little law now can save a lot later. A Slingshot company.

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2 Comments

  1. How does submitting a Certification of Beneficial Owner form to FinCEN affect the privacy of an anonymous business? Also, do you offer a service to file this particular form?

    1. Hi, there.

      My apologies for not responding to your inquiry sooner.

      The quick answer is we define anonymity as keeping ownership information off the Internet, for personal protection, privacy and more. Because the FinCEN database is secure, and only available to law enforcement and under very specific circumstances mostly related to finance, this data is not going to be available on the Internet. Also, don’t forget, when you move money around, have a FEIN, bank account and/or merchant account, the feds already have this information.

      Therefore, we do not feel the disclosure of Beneficial Ownership Information (or BOI) impacts anonymity in the slightest.

      We have a number of offerings to help with this:

      1. BOI Analysis. Need to know whether (1) you have a reporting company, and/or (2) who are your company’s beneficial owners? Access our free, anonymous, expert system here: https://docs.l4sb.com/start/CTABOIReporting.
      2. BOI Reporting (Initial and Updated Reports). We can help you do this, for a low-cost fee. Start here.
      3. BOI Compliance. Want help keeping track of dates, important deadlines, and free updates when needed? For a very low monthly fee, we can help you. Start here.

      I hope this helps. Thank you. Larry.

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