The deadline to file the Beneficial Ownership Information Report (BOI) under the Corporate Transparency Act (CTA) is fast approaching. This BOIR filing deadline is January 1, 2025 and will affect millions of reporting companies formed before January 1, 2024. This critical date marks the deadline for filing BOI reports with the Financial Crimes Enforcement Network (FinCEN). Failure to comply may result in penalties. That is why there is a need for early preparation.
In this context, let us proceed to break down what this deadline, which is less than two months away, involves and how companies can actually make certain preparations to meet their Corporate Transparency Act (CTA) filing obligation deadline.
Understanding the CTA BOIR Filing Deadline
The Corporate Transparency Act imposed a filing requirement on new and existing entities effective January 1, 2024. Under the one-time filing requirement for the Corporate Transparency Act, companies created on or after January 1, 2024 will have to file their BOI reports within 90 days of creation, and those created pre-2024 are allowed to file by January 1, 2025.
Beginning in 2025, entities created on or after January 1, 2025 shall must comply with the BOIR filing requirements within only 30 days of filing formation documents.
How to Prepare for the BOIR Filing Deadline
To meet the January 1, 2025 filing deadline, do the following:
1. Verify Exemptions
First, check to see if your business is exempt under the CTA. The CTA has 23 exemptions in total. Exempt entities include, but are not limited to, publicly traded companies, covered financial institutions and non-profits. If your entity is not exempt, then it is classified as a “reporting company” and must comply with the BOIR filing requirements.
2. Review Entity Records
Have your entity records up to date, including ownership percentages and management. In this case, accurate recordkeeping will ease the process of identifying the beneficial owners and preparing the BOI report.
3. Identify Beneficial Owners
There are two important factors determining who are beneficial owners:
- Individuals who own 25% or more of the company
- Individuals exercising substantial control over the company
4. Consider Obtaining FinCEN Identifiers
While not required, FinCEN identifiers can make reporting easier. Beneficial owners can get a unique FinCEN identifier that can be used instead of personal information in the BOI reports. This will reduce the need to enter personal details every time a person is to be listed as a beneficial owner.
5. File Early
With more than 32 million entities filing under the CTA, it would be best to submit your BOI report well in advance of the Corporate Transparency Act deadline. It may take some time to gather information from beneficial owners. Therefore, it would be appropriate to make an early start to avoid last-minute issues.
The Corporate Transparency Act in 2025 and Beyond
The BOI reporting timeline for newly formed entities formed after January 1, 2025 is even more strict; these shall file their reports within 30 days of the date of their formation. Any change in the beneficial ownership information shall be filed with FinCEN within 30 days of such change. This puts great emphasis on record maintenance.
Conclusion
For those entities formed before 2024, the BOIR filing deadline of the Corporate Transparency Act makes for a critical compliance date that cannot be ignored. Businesses can avoid facing penalties and ensure smoother compliance by verifying exemptions, updating their records and identifying their beneficial owners well in advance of the deadline.
Whether preparing for the upcoming deadline or planning for future requirements, proactively taking these steps now will save time and reduce stress.
If you require any assistance with the filing process or have any queries about BOIR filing, please contact us and let our team of experts help.