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Corporate Transparency Act Compliance

Corporate Transparency Act Compliance

 

Click Here to get started:

Current Clients may begin the process by submitting documentation through this link managed service by fidulegal.

You will be prompted to create a user account so please use your company email and your full name.  If you prefer, you may stop in the office to complete any of these steps.

FIDU LEGAL LINK

 

As you may be aware, the Corporate Transparency Act (CTA) requires the reporting of information about those with substantial control or ownership of any small entity to the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN).  This information must be filed in a Beneficial Ownership Information Report (BOI Report).  If you received the email linking to this page, this reporting requirement likely applies to you.

Action required:

    • If you have already filed your BOI Report(s), please let us know via email, and provide us with the report transcript(s) from FinCEN. 
    • If an accountant or other professional has already filed your BOI Report(s), please let us know via email and provide us with the transcript(s) for our records.  Please provide us with the transcript(s) within seven (7) days if you possess them. Please do not personally file any BOI Reports if you have not already.
    • If you have not, follow the link above.

 

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Example 1
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Example 3

Below are some frequently asked questions about BOI reporting.  BOI reporting can be somewhat complicated for entities with more complex control or ownership structures, so if you have any other questions, please contact us.

FAQ

What is beneficial ownership information?

Beneficial ownership information refers to identifying information about the individuals who directly or indirectly own or control a company.

Why do companies have to report beneficial ownership information to the U.S. Department of the Treasury?

In 2021, Congress passed the Corporate Transparency Act on a bipartisan basis. This law creates a new beneficial ownership information reporting requirement as part of the U.S. government's efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.

Why should I report?

It is extremely important that you provide us with this information in a timely manner given the approaching deadline, and FinCEN's stringent enforcement measures including fines of $591 per day and potential jailtime for errors, omissions, and late submissions.

When is the deadline?

                The deadline to report beneficial ownership information is December 31, 2024.

Does my company have to report?

                Yes. Some people think their business is exempt because it is small; this is not true. Any business with twenty or fewer full-time employees must report. Likewise, if your company has not filed a Federal income tax or information return demonstrating more than $5 million in gross receipts or sales, you must report.  Even if your business has twenty-one or more employees and $5 million plus in gross receipts or sales, home-based and web-based businesses must still report if they lack an operating presence at a physical office in the US. 

There are some exemptions.  If applicable, an exempt company need not complete the reports.  If your company is any of the following, you are exempt and do not need to report:

  • Securities reporting issuer,
  • governmental authority,
  • bank,
  • credit union,
  • depository institution holding company,
  • money services business,
  • broker or dealer in securities,
  • securities exchange or clearing agency, or other Exchange Act registered entity,
  • investment company or investment adviser,
  • venture capital fund adviser,
  • insurance company,
  • state-licensed insurance producer,
  • Commodity Exchange Act registered entity,
  • public accounting firm,
  • public utility,
  • financial market utility,
  • pooled investment vehicle,
  • tax-exempt entity or entity assisting a tax-exempt entity,
  • large operating company,
  • subsidiary of certain exempt entities, or
  • inactive entity.

All other companies must report, and you should provide beneficial ownership information to us via the above link.

Who is a beneficial owner?

A beneficial owner is an individual who either directly or indirectly: (1) exercises substantial control over a reporting company or (2) owns or controls at least 25 percent of a reporting company's ownership interests. Because beneficial owners must be individuals (i.e., natural persons), trusts, corporations, or other legal entities are not considered to be beneficial owners. However, in specific circumstances, information about an entity may be reported in lieu of information about a beneficial owner.

What is substantial control?

An individual can exercise substantial control over a reporting company in four different ways. If the individual falls into any of the categories below, the individual is exercising substantial control:

·         The individual is a senior officer (the company's president, chief financial officer, general counsel, chief executive office, chief operating officer, or any other officer who performs a similar function).

·         The individual has authority to appoint or remove certain officers or a majority of directors (or similar body) of the reporting company.

·         The individual is an important decision-maker for the reporting company.

·         The individual has any other form of substantial control over the reporting company.

What are ownership interests?

Reporting companies are also required to identify all individuals who own or control at least 25 percent of the ownership interests of the company. Any of the following may be an ownership interest:

  • Any equity, stock, or similar instrument; preorganization certificate or subscription; or transferable share of, or voting trust certificate or certificate of deposit for, an equity security, interest in a joint venture, or certificate of interest in a business trust;
  •  Any capital or profit interests;
  • Voting rights, convertible instruments, or futures;
  • Warrants, rights or option or privileges to acquire equity, capital, voting rights, convertible instruments, or other interests in a reporting company regardless of whether they are characterized as debt;
  • Puts, calls, straddles or other option or privilege of buying or selling ownership interests; or 
  • Any other instrument, contract, arrangement, understanding, relationship, or mechanism used to establish ownership.

·         Note: FinCEN specifies that the underlying reality of ownership, not its form, drives the identification of beneficial owners.

These rules can be highly confusing, particularly if your entity has several types of ownership interests.

What if a beneficial owner owns or has substantial control of my business through another entity?


If one of the owners or controllers of your company is a trust, corporation, or other legal entity, the individuals in that entity who have substantial control or ownership interests of the reporting company (your entity) are considered beneficial owners.  In other words, FinCEN “looks through” entities to the persons behind them. For instance:

NextCorp owns twenty-five percent of SmallCo. NextCorp is not a beneficial owner; rather, any individuals in NextCorp who indirectly own or control part of SmallCo are beneficial owners.


If a trust has substantial control or ownership interests, the trustees, beneficiaries, and grantor or settlor of the trust or other individual with control or ownership of the trust are all considered beneficial owners of the reporting company. For instance:

The Trust of John M. Smith owns thirty percent of Busy Inc. Therefore, the beneficiaries and trustees of the Trust of John M. Smith are beneficial owners of Busy Inc.

In general, it is best to err on the side of caution and report more individuals as beneficial owners rather than less.

Can a parent company file a single BOI report on behalf of its group of companies?

No. Any company that meets the definition of a reporting company and is not exempt is required to file its own BOI report.

What if my entity wholly owns subsidiary entities, or is wholly owned by a larger entity?

Beneficial owners of a parent reporting company, including its senior officers, may also be beneficial owners of certain downstream subsidiary reporting companies that are owned or controlled by the parent company. An individual may exercise substantial control over a reporting company if the individual has control over one or more intermediate entities that exercise substantial control over a reporting company.

In situations involving multiple downstream subsidiaries, an analysis of the corporate organization ownership structure and control structure should be completed to determine which senior officers exercise substantial control over these subsidiaries.

Regardless of ownership and control structure, all entities must report, even subsidiaries.

What if I have updates to my beneficial ownership information in the future?

                If there are any updates or corrections to your beneficial ownership information, please immediately contact us. Federal penalties for failing to update or correct beneficial ownership information are identical to penalties for late or inaccurate initial reports.  The deadline for corrections or updates is thirty (30) calendar days of the change occurring, or of becoming aware of the inaccuracy.

How will I know when there are updates to my entity's beneficial ownership information?

                It is best to set up regular connections with your entity's beneficial owners to ensure compliance.  Normal life events, such as deaths, inheritances, the expiration or renewal of a license or passport, or small changes to corporate structure often require updates to FinCEN if they affect beneficial ownership.  A failure to re-file after the expiration of a driver's license, for instance, could result in fines of $590 per day. 

It may be wise to ensure that beneficial owners in your entity are required by contract to provide beneficial ownership information for use in the reporting company's continuing CTA compliance.

                If some of your beneficial owners are officers in external organizations with substantial control or ownership interests in your entity, be sure to set up regular communication with that external organization to ensure compliance.

                Again, please regularly contact the beneficial owners of your entity to check if there have been any changes to the information they submitted to us.  If any change occurs in the future, please contact us immediately to help protect yourself from liability. 

I have additional questions about BOI reporting.

                Please do not hesitate to contact us Call C&B Law Office if your beneficial ownership situation is complex or if you have any other questions related to BOI reporting.

Contact a Corporate Lawyer in Westmoreland County Today 

If you need to incorporate a business, do it strategically and smartly. At Creenan & Baczkowski, PC, our business attorney helps clients form corporations and plan for their futures. Contact us either by completing the online form or by calling us at 724-733-8832, and we will schedule a BOI Report Registration Checkup to discuss your business venture.

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