Do You Own or Plan to Form a Business Entity?

If you own a corporation, limited liability company (LLC), limited partnership, limited liability partnership, limited liability limited partnership, or trust, or are planning to form one, it’s essential to be aware of a new federal filing requirement. This requirement mandates filing information about your entity upon formation and within 30 days of any changes to The Financial Crimes Enforcement Network (FinCEN).

Our Services

At Corridor Consulting, we assist all of our clients with filing their BOI reports upon business formation and as needed when we are informed of changes. 

Understanding the Beneficial Ownership Information Report

Background

The Corporate Transparency Act (CTA), passed by Congress in 2021, requires corporations, LLCs, and other business entities to provide information about their owners to FinCEN, a unit separate from the IRS. This act is part of a government effort to combat corruption, money laundering, terrorist financing, tax fraud, and other illicit activities by targeting anonymous shell companies.

Requirements

Businesses subject to the law must file a “beneficial owner report” with FinCEN. This report must include:

• • Each beneficial owner’s full legal name

• • Date of birth

• • Residential street address

• • An identifying number from a document like a driver’s license or passport

Database and Penalties

FinCEN will include this information in a database for use by law enforcement and federal regulators. The database will not be publicly accessible. Violations can lead to a $500-a-day penalty (up to $10,000) and up to two years’ imprisonment.

Key Aspects of the Proposed Regulations

1. 1. Filing Requirement Timeline: The CTA takes effect when the proposed regulations become final, expected in mid-to-late 2022. New entities must comply within 30 days of formation, and existing ones have one year.

1. 1. Scope: The reporting requirements will apply to almost every small business, except sole proprietorships or general partnerships. Larger companies with more than 20 full-time employees and $5 million in gross receipts are exempt.

1. 1. Beneficial Owners: There can be multiple beneficial owners, including individuals owning 25% or more of the company or those exercising substantial control.

1. 1. Applicability to Law and Accounting Firms: Most law and accounting firms are not exempt unless they meet specific criteria.

Need Assistance with BOI Reporting?

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