Guidelines For Compliance With The Corporate Transparency Act
Numerous companies established post January 1, 2024, are obligated to submit a Beneficial Owner Report to FinCEN within 90 days of their inception. Similarly, entities formed before January 1, 2024, must complete this requirement by December 31, 2025. A beneficial owner is defined as an individual with substantial control over the company or ownership of at least 25% of its shares. Exceptions exist, notably for "large operating companies" with over 20 employees and $5 million in gross sales.
Failure to dutifully report accurate and updated beneficial ownership details to FinCEN, or the intentional submission of false information, may result in civil or criminal penalties. Civil penalties can accumulate up to $500 per day for ongoing violations, while criminal penalties may involve imprisonment for up to two years and/or fines up to $10,000.
It's crucial to note that a reporting company can have multiple beneficial owners. For instance, a reporting company might have one individual with substantial control and a few others owning or controlling at least 25% of the company. The criteria for substantial control encompass being a senior officer, having authority to appoint or remove officers or a majority of directors, being a key decision-maker, or having any other form of significant influence over the reporting company.
Reporting companies are mandated to identify all individuals owning or controlling a minimum of 25% of the company's ownership interests. Ownership interests include equity, stock, voting rights, capital or profit interests, convertible instruments, options, or any other mechanism used to establish ownership.
If mandated to disclose your company's beneficial ownership information to FinCEN, the electronic submission must be carried out through a secure filing system accessible on FinCEN's BOI E-Filing website.
A reporting entity must provide information on the following:
Its official legal name;
Any alternate trade names, such as "doing business as" (d/b/a) or "trading as" (t/a);
The current physical address of its primary business location within the United States (e.g., the headquarters of a U.S. reporting entity) or, for entities with their principal place of business outside the United States, the current address used for U.S. business operations (e.g., a foreign reporting entity's U.S. headquarters);
Jurisdiction of formation or registration;
Taxpayer Identification Number (TIN), or if a foreign reporting entity lacks a TIN, a tax identification number issued by a foreign jurisdiction along with the jurisdiction's name.
Additionally, the reporting entity must specify whether the submission is an initial report or a correction or update to a previous report.
For every beneficial owner who is an individual, the reporting company is required to furnish:
The individual's full name;
Date of birth;
Residential address; and
A unique identifier sourced from an approved identification document, such as a passport or a U.S. driver's license.
There is no obligation for yearly reporting. Reporting companies are only required to submit an initial BOI report and subsequently provide updated or corrected BOI reports as necessary.
To ensure thorough compliance with the Corporate Transparency Act and address any specific concerns or questions related to your business, we recommend reaching out to Cea Legal P.C.. Our expertise can provide tailored advice and guidance, offering valuable insights to navigate the complexities of the Corporate Transparency Act and safeguard your company's interests. Contact us for personalized assistance in achieving full adherence to the regulatory requirements.
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