The Beneficial Ownership Information or BOI reporting requirements are crucial for businesses operating in the U.S., however, not all entities will be expected to file BOI. The CTA limits who shall report, and what entities may be exempted from filing. In this article, we are going to look at such exemptions and what they mean to your business.
What Is the Corporate Transparency Act 2024?
The Corporate Transparency Act 2024 forms one of the sets of legislation to help deter illegal activities such as money laundering and tax evasion. According to the law, a business is obligated to report its beneficial ownership with FinCEN. These reports will help the U.S. government understand who may have ownership of a given business, thus instilling transparency in various fields.
However, not all of the entities will be captured under the CTA. It may be worth understanding if your business is out of the ambit of BOI reporting in order to save time and avoid unnecessary filings.
BOI Filing Requirements
Pursuant to minimum requirements for BOI reporting, filers must report anyone who directly or indirectly owns or controls 25% or more of an entity, along with senior officers who have significant control over the management of the business. The most common filer statuses include:
- Corporations
- Limited Liability Companies (LLCs)
- Limited partnerships
- Other business entity types operating in the United States.
Nonetheless, there are a few exceptions, and it is important to understand them in identifying whether your business needs to file.
BOI Exemptions
Not all businesses will fall under filing with the Corporate Transparency Act 2024. Some of the key exemptions include:
- Larger Operating Companies – Businesses with more than 20 full-time employees, annual revenues over $5 million, and a physical office in the United States, typically do not need to report.
- Wholly-Owned Subsidiaries – A company wholly-owned by a parent company that has already filed a BOI report is exempted from filing.
- Dormant Companies – Companies that have not conducted any business or financial activity in the preceding year and can meet certain requirements relating to inactivity are exempt from filing BOI reports.
- Exemptions of Regulated Entities – Those entities already regulated under federal law, such as banks, credit unions, and insurance companies, would probably be exempt since they already have requirements for reporting ownership through other legal channels.
Knowing that your corporation may be exempt will eliminate the burden to file from you and will go a long way in assuring you that you remain in compliance without unnecessary filings.
Check out the full list of exemptions for BOI reporting on our website here. You may also want to check your eligibility for the BOI filing by taking our quiz.
Corporate Transparency Act Penalties
Failure or neglect to file with the BOI, as required by reporting under the Corporate Transparency Act of 2024, may result in substantial penalties, including both fines and jail term.
Conclusion
If your company is assumed to be exempt from BOI reporting, then confirming such status is highly crucial. Definitive penalties emanate from both failure to file when required and mistaken beliefs of exemption.
While the Corporate Transparency Act 2024 may have clearly outlined guidelines, a business should seek expertise in how to comply or verify exemption status. Stay updated to save your business from any unnecessary legal challenges.
If you own or operate a business in the U.S. and are still confused about the BOI reporting requirements, worry not. You can visit our website or contact us. We will take care of your needs.