Corporate Transparency Act Reporting Requirements
A new federal law called the Corporate Transparency Act ("CTA") requires virtually every business entity to file a report with the federal government to avoid criminal and civil penalties.
The reporting requirements of the CTA went into effect on January 1, 2024. Every business entity ("Reporting Company") must report certain information about the business and its owners to the U.S. Treasury’s Financial Crimes Enforcement Network ("FinCEN"). This report is called a beneficial ownership information report ("BOI Report").
WHO MUST FILE A REPORT
Entities Subject to the Reporting Requirements
Exempt Entities and Exceptions
Do Inactive Entities Have to File a BOI Report?
THE INITIAL BOI REPORT
What Information Must be Reported?
If your business is a Reporting Company, you must report certain information about the business, each beneficial owner, and the company applicant (if the business was formed after 2024). These reports are called beneficial owner information reports ("BOI Reports")
Reporting Company. A Reporting Company must report its legal name, any trade names, the current street address of its principal place of business or, for Reporting Companies whose principal place of business is outside the United States, the current address from which the Reporting Company conducts business in the United States, its jurisdiction of formation or registration, and its Taxpayer ID (aka EIN).
Beneficial Owners. For each Beneficial Owner, the Reporting Company must report the individual’s name, date of birth, residential address, and an image of each beneficial owner’s driver’s license or passport. A beneficial owner is an individual who either directly or indirectly: (1) exercises “substantial control” over the Reporting Company, or (2) owns or controls at least 25% of the Reporting Company’s ownership interests. The following individuals exercise “substantial control” over a Reporting Company: (a) senior officers, (b) anyone who can appoint or remove officers, and (c) important decision-makers.
If a trust owns a Reporting Company, the following individuals would exercise substantial control over the Reporting Company: a trustee; a beneficiary who is the sole permissible recipient of trust income; a principal who has the right to demand a distribution of or withdrawal of all, or substantially all, of the trust assets; a grantor who has the right to revoke or otherwise withdrawal trust assets.
Company Applicant. For businesses formed on or after January 1, 2024, the Reporting Company must report the company applicant’s name, date of birth, address, and a copy of their driver’s license or passport. If the company applicant has a FinCEN Identifier, you may report the FinCEN Identifier instead of this information. The company applicant is the individual who directly files the document that creates or registers the Reporting Company.
When is the Deadline to File the Initial BOI Report?
What are the Penalties for Non-Compliance?
CONTINUING REPORTING REQUIREMENTS
Zachary Copp, Esq.
Mr. Copp is a graduate of the University of Texas at Austin and the founder of the Copp Law Firm. He has been licensed in Texas for 20 years and has personally formed over 3,500 Texas LLCs since 2015. He was recognized as a Rising Star by SuperLawyers® for seven straight years. See full bio →