The CPA Advisory Group can file for you
A reminder for our clients, especially our small business owners: The clock is ticking for U.S. companies to file the new Beneficial Ownership Information Report with the federal government.
It is anticipated that 32.6 million businesses are being required to comply with this new reporting requirement. The intent of the BOI reporting requirement is to help US law enforcement combat money laundering, the financing of terrorism and other illicit activity.
The Corporate Transparency Act (“CTA”) that requires the filing is not a part of the tax code. Rather, it is a part of the Bank Secrecy Act, a set of federal laws that require record-keeping and report filing on certain types of financial transactions. Under the CTA, BOI reports will not be filed with the IRS, but with the Financial Crimes Enforcement Network (FinCEN), another agency of the Department of Treasury.
Below is some preliminary information for you to consider as you approach the BOI deadline facing most U.S. businesses. This information is meant to be general-only and should not be applied to your specific facts and circumstances without consultation with competent legal counsel and/or other retained professional adviser.
What entities are required to file?
Entities organized both in the U.S. and outside the U.S. may be subject to the CTA’s reporting requirements. Domestic companies required to report include corporations, limited liability companies (LLCs) or any similar entity created by the filing of a document with a secretary of state or any similar office under the law of a state or Indian tribe.
Domestic entities that are not created by the filing of a document with a secretary of state or similar office are not required to report under the CTA.
Foreign companies required to report under the CTA include corporations, LLCs or any similar entity that is formed under the law of a foreign country and registered to do business in any state or tribal jurisdiction by filing a document with a secretary of state or any similar office.
Are there any exemptions from the filing requirements?
There are 23 categories of exemptions. Included in the exemptions list are publicly traded companies, banks and credit unions, securities brokers/dealers, public accounting firms, tax-exempt entities and certain inactive entities, among others. Please note these are not blanket exemptions and many of these entities are already heavily regulated by the government and thus already disclose their BOI to a government authority.
In addition, certain “large operating entities” are exempt from filing. To qualify for this exemption, the company must:
- Employ more than 20 people in the U.S.;
- Have reported gross revenue (or sales) of over $5M on the prior year’s tax return; and
- Be physically present in the U.S.
Who is a beneficial owner?
Any individual who, directly or indirectly, either:
- Exercises “substantial control” over a reporting company, or
- Owns or controls at least 25 percent of the ownership interests of a reporting company.
An individual has substantial control of a reporting company if they direct, determine or exercise substantial influence over important decisions of the reporting company. This includes any senior officers of the reporting company, regardless of formal title or if they have no ownership interest in the reporting company.
The detailed CTA regulations define the terms “substantial control” and “ownership interest” further.
When must companies file?
There are different filing timeframes depending on when an entity is registered/formed or if there is a change to the beneficial owner’s information. But the biggest one is 8 weeks from today.
- New entities (created/registered in 2024) – must file within 90 days.
- New entities (created/registered after 12/31/2024) – must file within 30 days.
- Existing entities (created/registered before 1/1/24) – must file by 1/1/25.
- Reporting companies that have changes to previously reported information or discover inaccuracies in previously filed reports – must file within 30 days.
- If you are subject to reporting, go to Beneficial Ownership Information Reporting | FinCEN.gov to complete up to 51 questions about your company, BOI, and CA if applicable. There are additional questions for each BO that owns or controls a ≥25% interest (see D.1.) or shows substantial control (see D.2.). There are additional questions for each CA for all new companies started in 2024.
Or, CPA Advisory Group can file the BOI Report for you, if you contact us soon
Another option is to have CPA Advisory Group prepare the report for you. The investment for this is $350 for a single beneficial owner firm plus $95 for each additional Beneficial Owner (BO) and Company Applicant (CA) as identified in Chapter 2 of Small Entity Compliance Guide | FinCEN.gov.
For businesses that don’t file the report, there is a $591 per day penalty up to a maximum of $10,000 for willful violation of the filing requirements as well as up to two years imprisonment.
Reach the CPA Advisory Group by calling our Columbus offices at (614) 942-1990, sending an email to us at info@cpaagi.com, or just fill out the Contact form on this website, at cpaagi.com/contact.