Frequently Asked Questions

The Corporate Transparency Act (CTA) is mainly an anti-money laundering law, intended to keep bad actors from using corporations, LLCs, or similar entities to facilitate money laundering, financing of terrorism, tax fraud, and other illegal acts in the United States.

• Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
• Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.

A beneficial owner is an individual who either directly or indirectly:

1. Owns or controls at least 25% of the reporting company’s ownership interests – OR –
2. Exercises substantial control over the reporting company

Beneficial ownership information is certain identifying information about the individuals who directly or indirectly own or control a company.  To comply with the Corporate Transparency Act, all beneficial owners of a reporting company are required to report the following information:

1. The individual’s name
2. Date of birth
3. Residential address
4. An ID number from an acceptable identification document such as a passport or U.S. driver’s license
5. The issuing state or jurisdiction of the identification document used to obtain the ID number in item 4.
6. An image of the identification document used to obtain the ID number in item 4.

FinCEN’s Small Business Compliance Guide defines an “important-decision maker” as any individual who directs, determines, or has substantial influence over the important decisions made by a reporting company, including decisions regarding the reporting company’s:

1. Business such as:
   • Nature, scope, and attributes of the business
   • The selection or termination of business lines or ventures, or geographic focus
   • The entry into or termination, or the fulfillment or non-fulfillment, of significant contracts
2. Finances, such as:
   • Sale, lease, mortgage, or other transfer of any principal assets
   • Major expenditures or investments, issuances of any equity, incurrence of any significant debt, or approval of the operating budget
   • Compensation schemes and incentive programs for senior officers
3. Structure, such as:
   • Reorganization, dissolution, or merger
   • Amendments of any substantial governance documents of the reporting company, including the articles of incorporation or similar formation documents, bylaws, and significant policies or procedures

*The above guidance is obviously vague, and the can vary by organization, so it’s best to get the opinion of a trusted legal adviser if your business has a complex corporate hierarchy.

The underlying theme behind substantial control is an individual’s ability to make or influence important decisions on behalf of the company.  Important decisions are those related to a company’s finance, structure, or business activities.  Anyone who can direct, determine, or influence these types of decisions for a business is considered to have substantial control over that business.

If an individual falls into any of the four categories below, the individual is exercising substantial control:

1. Senior officers (the company’s president, chief financial officer, general counsel, chief executive office, chief operating officer, or any other officer who performs a similar function).
2. Has authority to appoint or remove certain officers or a majority of directors (or similar body) of the reporting company.
3. An important decision-maker for the reporting company.
4. Any other form of substantial control over the reporting company. *

*FinCEN’s Small Business Compliance Guide includes a “Catch All” category for substantial control, and states that “Control exercised in new and unique ways can still be substantial.  For example, flexible corporate structures may have different indicators of control than the indicators included [in this guide]”.

This guidance is obviously vague, and can vary by organization, so it’s best to get the opinion of a trusted legal adviser if your business has a complex or unique corporate structure.

No.  Social Security numbers are not required by FinCEN at this time.

There are five instances in which an individual who would otherwise be a beneficial owner of a reporting company qualifies for an exception. In those cases, the reporting company does not have to report that individual as a beneficial owner to FinCEN.

The five categories of individuals who qualify for an exception are:

1. Minor child – As defined under the law of the State of Indian tribe in which the domestic reporting company is created, or the foreign reporting company is first registered.

• • • Special rule:  If a minor child owns 25% or more of a reporting company, then the reporting company may report information about the child’s parent or legal guardian until the child reaches the age of majority. 

2. Nominee, intermediary, custodian, or agent – The individual merely acts on behalf of an actual beneficial owner as the beneficial owner’s nominee, intermediary, custodian, or agent.
3. Employee – An individual qualifies for this exception if all three of the following criteria apply:

• • • Individual is subject to the will and control of the employer in what and how to do work and may be discharged from work.
    • Individual’s substantial control over, or economic benefits from, the reporting company are derived solely from their status as an employee.
    • Individual is not a senior officer of the reporting company. “Senior officer” means any individual holding the position or exercising the authority of a president, chief financial officer, general counsel, chief executive officer, or chief operating officer, or any other officer, regardless of official title, who performs a similar function.

4. Inheritor – The individual’s only interest in the reporting company is a future interest through a right of inheritance, such as through a will providing a future interest in a company.
5. Creditor – An individual who would meet the definition of a beneficial owner of the reporting company solely through rights or interests for the payment of a predetermined sum of money, such as a debt incurred by the reporting company, or a loan covenant or other similar right associated with such right to receive payment that is intended to secure the right to receive payment or enhance the likelihood of repayment.

• Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
• Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.

A reporting company will have to report:

1. Its legal name
2. All trade names, “doing business as” (d/b/a), or “trading as” (t/a) names
3. The current street address of its principal place of business in the United States.
   • Reporting companies whose principal place of business is outside the United States must report the current address from which the company conducts business in the United States.
   • Reporting a PO box is not allowed under any circumstance. The reporting company must provide an actual physical address located in the United States.
4. Its jurisdiction of formation or registration
5. Its Taxpayer Identification Number, which can also be:
   • The a tax identification number issued by a foreign jurisdiction and the name of the jurisdiction if a reporting company has not been issued an United States Tax Identification Number.
6. A reporting company will also have to indicate whether it is filing an initial report, or a correction or an update of a prior report.

1. Securities reporting issuer (Exemption #1)
2. Governmental authority (Exemption #2)
3. Bank (Exemption #3)
4. Credit Union (Exemption #4)
5. Depository institution holding company (Exemption #5)
6. Money transmitter business (Exemption #6)
7. Broker or dealer in securities (Exemption #7)
8. Securities exchange or clearing agency (Exemption #8)
9. Other Exchange Act registered entity (Exemption #9)
10. Investment company or investment adviser (Exemption #10)
11. Venture capital fund adviser (Exemption #11)
12. Insurance company (Exemption #12)
13. State-licensed insurance provider (Exemption #13)
14. Commodity Exchange Act registered entity (Exemption #14)
15. Public Accounting Firm (Exemption #15)
16. Public utility (Exemption #16)
17. Financial market utility (Exemption #17)
18. Pooled investment vehicle (Exemption #18)
19. Tax-exempt entity (Exemption #19)
20. Entity assisting a tax-exempt entity (Exemption #20)
21. Large operating company (Exemption #21)
22. Subsidiary of certain exempt entities (Exemption #22)
23. Inactive entity (Exemption #23)

The sooner the better, but you may have time depending on when your company was created.

A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025 to file its initial BOI report.

A reporting company created or registered on or after January 1, 2024, and before January 1, 2025, will have 90 calendar days after receiving notice of the company’s creation or registration to file its initial BOI report. This 90-calendar day deadline runs from the time the company receives actual notice that its creation or registration is effective, or after a secretary of state or similar office first provides public notice of its creation or registration, whichever is earlier. 

Reporting companies created or registered on or after January 1, 2025, will have 30 calendar days from actual or public notice that the company’s creation or registration is effective to file their initial BOI reports with FinCEN.

Federal, State, local, and Tribal officials, as well as certain foreign officials may submit a request through a U.S. Federal government agency, to obtain beneficial ownership information for authorized activities related to national security, intelligence, and law enforcement.

Financial institutions will have access to beneficial ownership information in certain circumstances, with the consent of the reporting company. Those financial institutions’ regulators will also have access to beneficial ownership information when they supervise the financial institutions.

For full details on who can access your beneficial ownership information can be found on the FinCEN website at:    Fact Sheet: Beneficial Ownership Information Access and Safeguards Final Rule

The Corporate Transparency Act specifies that a person who willfully violates the BOI reporting requirements may be subject to the following:

1. Civil penalties of up to $500 (adjusted for inflation) for each day that the violation continues.
2. Criminal penalties of up to two years imprisonment and a fine of up to $10,000.

Potential violations include:

1. Willfully failing to file a beneficial ownership information report
2. Willfully filing false beneficial ownership information
3. Willfully failing to correct or update previously reported beneficial ownership information.

A sole proprietorship is a reporting company only if it was created (or, if a foreign company, registered to do business) in the United States by filing a document with a secretary of state or similar office.

Filing a document with a government agency to obtain (1) an IRS employer identification number, (2) a fictitious business name, or (3) a professional or occupational license does not create a new entity, and therefore does not make a sole proprietorship filing such a document a reporting company.

An ownership interest is generally an arrangement that establishes ownership rights in the reporting company.   Any of the following may be an ownership interest:

• Equity, stock, or voting rights
• A capital or profit interest
• Convertible instruments
• Options or other non-binding privileges to buy or sell any of the foregoing
• Any other instrument, contract, or other mechanism used to establish ownership.

*It’s best to get the opinion of a trusted legal adviser if your business has a complex or unique corporate ownership structure.

No.  The information needed to file a BOI report is very straightforward and, in most cases, should not require the assistance of a CPA or attorney. 

However, if your company has a complex corporate structure or multiple types of ownership interests, then it’s best to get the opinion of a trusted legal adviser in determining the ultimate beneficial owners of your company.

Generally no, but that depends on the work being performed.

Accountants and lawyers who provide general accounting or legal services are not considered beneficial owners because ordinary, arms-length advisory or other third-party professional services to a reporting company are not considered to be “substantial control”.

Additionally, a lawyer or accountant who is designated as an agent of the reporting company may qualify for the “nominee, intermediary, custodian, or agent” exception from the beneficial owner definition.

However, an individual who holds the position of general counsel in a reporting company is a “senior officer” of that company and is therefore a beneficial owner.

No. For a director of a reporting company to qualify as a beneficial owner they must directly or indirectly, exercises substantial control over the reporting company, or own/control at least 25 percent of the ownership interests of a reporting company. Whether a particular director meets any of these criteria is a question that the reporting company must consider on a director-by-director basis.

Company applicants are people who file the paperwork to form a company, so in most cases they’ll be attorneys and paralegals.  To qualify as a company applicant, a person must either:

1. Directly file the document that creates or registers a company; – OR –
2. Be primarily responsible for directing or controlling the filing.

Also note that only companies created or registered on or after January 1, 2024 need to report their company applicants and a maximum of two company applicants can be submitted by any one reporting company.

For company applicant, a reporting company will have to provide:

1. The individual’s name
2. Date of birth
3. Address (residential or business)
4. An identifying number from an acceptable identification document such as a passport or U.S. driver’s license
5. The name of the issuing state or jurisdiction of identification document in item 4.
6. An image of the identification document used to obtain the identifying number in item 4 .

Note:  If the company applicant works in corporate formation (for example, as an attorney or corporate formation agent) then the reporting company must report the company applicant’s business address. Otherwise, the reporting company must report the company applicant’s residential address.

No, there is no annual reporting requirement. However, reporting companies must file updated or corrected BOI reports as needed.

To help with this ongoing reporting requirement, we monitor several public and private databases, looking for events that could require a reporting company to update their BOI report.  We will contact the primary user of your company whenever we flag an event that could potentially put you out of compliance.

If there is a change to the required information about your company or its beneficial owners in a beneficial ownership information report that your company filed, you must file an updated report no later than 30 days after the date of the change.

This requirement does not apply to changes about the company applicants of a reporting company.

Examples of the changes that would require an updated BOI report include:

1. Any change to the reporting company’s address
2. Any new DBA or trade names
3. A change in beneficial owners, such as a new CEO, or a sale that causes an owner’s percent of the company to rise above or fall below the 25 percent threshold
4. Any change to a beneficial owner’s name
5. Any change to a beneficial owner’s address
6. Any change to the unique identifying number previously provided to FinCEN

Note:  If a beneficial owner obtains a new driver’s license or other identifying document that includes a changed name, address, or identifying number, the reporting company is also required to file an updated beneficial ownership information report with FinCEN, including an image of the new identifying document.

Updated BOI reports will require all fields to be submitted, including the previously reported unchanged information, as well as the newly updated pieces of information. For example, if a reporting company changes its legal name, the reporting company will need to file an updated BOI report to include the new legal name and the previously reported, unchanged information about the company, its beneficial owners, and, if required, its company applicants.

To help save time, our platform will save all your previously reported beneficial ownership information and allow you to update just the information that has changed from your previous reports.  If you have multiple companies, you can apply these changes to all companies at the same time and then file a batch of update reports.

If you learn of an inaccuracy in a report, your company must correct it no later than 30 days after the date your company became aware of the inaccuracy or had reason to know of it. This includes any inaccuracy in the required information provided about your company, its beneficial owners, or its company applicants.

Both individuals and corporate entities can be held liable for willful violations, including not only the individual who actually files (or attempts to file) false information with FinCEN, but also anyone who willfully provides the filer with false information to report.

Both individuals and corporate entities may also be liable for willfully failing to report complete or updated beneficial ownership information.  In such circumstances, individuals can be held liable if they either cause the failure or are a senior officer at the company at the time of the failure.

No. Consolidation of the employee count across multiple entities is not permitted. 

For a company to qualify for the large operating company exemption must itself employ more than 20 full-time employees in the United States.