If you own a small business, you have probably heard about the Corporate Transparency Act—and if not, then you need to.

Originally passed in 2021, the Corporate Transparency Act became effective in early 2024. The Act requires each “Beneficial Owner” of any “Reporting Company” to file a Beneficial Ownership Information Report (BOIR) with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), which provides basic information about the company and personal identifying information its owners.

“Reporting Company” is defined to include “a corporation, limited liability company, or other similar entity that is” “created by the filing of a document with a secretary of state or a similar office under the law of a State or Indian Tribe.”

Basically, any small business.

That said, the Act has a number of exceptions for certain types of entities, including tax-exempt organizations, large operating companies (with twenty or more employees and $5,000,000 or more in gross receipts or sales) and businesses operating in highly regulated industries (such as insurance companies and financial institutions).

A “Beneficial Owner” is anyone who “directly or indirectly” “exercises substantial control over the entity,” or ‘‘owns or controls not less than 25 percent of the ownership interests,” but excludes minors, those acting on behalf of others, employees who only have control by virtue of their job, someone whose only interest is through a right of inheritance, and creditors.

If that sounds like you, or someone you know, get in contact with an attorney.

BOIR Initial Filing Deadlines:

Reporting company established before January 1, 2024—by or before January 1, 2025

Reporting company established on or after January 1, 2024—90 days after creation.

Reporting company established on or after January 1, 2025—30 days after creation.

And not only that—you are required to file additional reports if that information changes, such as if the company’s name changes, it registers for a new dba, its ownership changes, an owner’s address or other personal information changes.

BOIR Update Filings:

30 days after the day that the change occurred.

The Act imposes harsh penalties for noncompliance—civil penalties of $500 per day with potential, additional criminal penalties.

While purportedly needed “to combat money laundering, terrorist financing, and other forms of illicit finance” (See Remarks of Director Gacki), the Act imposes yet another burden on the American small business owners who are the backbone of the real economy.

FinCEN was kind enough to provide their own Small Entity Compliance Guide and Ohio’s Secretary of State has also published a guidance. Both are helpful in assessing a company’s reporting obligations. And FinCEN’s website provides additional resources and information for completing the BOIR filing.

As we enter the close of 2024, deadlines are upon us! Established businesses have until the end of the year. New companies need to act sooner.

If you have any questions, need assistance, or would simply prefer an attorney complete this task, we handle BOIR applications and would be happy to discuss your specific needs.