According to the regulations set by the Corporate Transparency Act (CTA), Limited Liability Companies (LLCs) in Texas are required to report their Beneficial Ownership Information (BOI) to the Financial Crimes Enforcement Network. The rule was set up to increase transparency and to help in the efforts to deter illicit financial activities. Thus, as an owner of a Texas LLC, it is important that you understand the BOI filing requirement to avoid falling into non-compliance status and its penalties.
What is BOI Reporting?
BOI reporting involves filing information regarding an organization’s beneficial owners with FinCEN. A beneficial owner is any person who, directly or indirectly, owns 25% or more of the company or has substantial control over its activities. Texas LLCs have to provide detailed information about such persons, which will eventually make the ownership and control of businesses transparent.
The BOI filing was made to enhance corporate accountability, and so the rules require all covered entities, including LLCs, to report accordingly.
Who Needs to File a BOI Report for Texas LLCs?
Texas LLCs need to file the BOI report unless exempt under a category designated by FinCEN. Generally speaking, your LLC should file a BOI report, provided it is privately held and not exempt. Entities that may be considered exempt from filing a BOI include publicly traded companies and regulated entities such as banks.
What Information is Required in a BOI Report?
When filing a BOI report for a Texas LLC, the following information must be submitted about each beneficial owner:
- Full legal name
- Date of birth
- Residential or business address
- An ID number from an acceptable identifying number (such as a driver’s license, passport, or other government-issued ID)
In addition to providing information about the LLC’s beneficial owners, the company’s identifying details, such as its legal name, business address, and EIN (Employer Identification Number), must also be shared.
Filing Deadlines for BOI Reports in Texas
BOI reports of LLCs newly registered in Texas, i.e., registered after the start of 2024, must be filed within 90 days from the date of registration of the LLC in the state. The due date for reports by existing LLCs, i.e., those registered before the start of 2024, is January 1, 2025.
Penalties for Non-Compliance
Failing to file a BOI report or submitting incorrect information can result in hefty fines and potential legal consequences. Penalties may include:
- Fines of up to $500 per day for each day the report is late or incomplete
- Criminal penalties, including imprisonment, in cases of intentional non-compliance
Texas LLCs must take their BOI filing responsibilities seriously to avoid these penalties and remain compliant with federal regulations.
Conclusion
Filing BOI reports is now a requirement under the Corporate Transparency Act for Texas LLCs. Understanding the filing process and deadlines will help business owners maintain compliance with FinCEN’s regulations. Timely submission and proper reporting will prevent fines and penalties that may disrupt business operations.