Federal Government Requiring Business Owners To File Beneficial Ownership Report Or Risk Fines

The deadline for businesses to file a Beneficial Ownership Report (BOI) is approaching. Failure to do so could cost business owners thousands of dollars.

The Corporate Transparency Act (CTA), enacted January 1, 2024, aims to tackle illicit financial activity, including tax fraud and money laundering.

For most business owners, the deadline to file beneficial ownership reports or corporate transparency reports is January 1, 2025, as long as the business was created before January 1, 2024. The rules are different for companies created in 2024 and beyond.

The deadline breakdown business owners should know is as follows:

• Companies created or registered in 2024 will have 90 calendar days to file after receiving actual or public notice that its creation or registration is effective.

• Companies created or registered before January 1, 2024, have until January 1, 2025, to file.

• Companies created or registered on or after January 1, 2025, will have 30 calendar days to file after receiving actual or public notice that its creation or registration is effective.

According to the U.S. Chamber of Commerce, corporate transparency reports must include any beneficial owners’ full legal name, date of birth, home address, and a photocopy of their U.S. driver’s license or passport.

Small business owners should include the company’s full legal name, the company’s business address, the state or tribal jurisdiction where the company was formed or first registered, and the taxpayer identification number and identity documents such as a filed Articles of Incorporation or Organization.

Not Filing A Beneficial Ownership Report Could Cost Thousands

Under CTA, businesses that fail or violate the reporting requirements may be subject to civil penalties of up to $591 per day. They may also face criminal penalties of up to two years imprisonment and a fine of up to $10,000.

At least 23 entities are exempt, including large operating companies, companies with over 20 full-time employees in the U.S., and over $5 million in gross sales or receipts from U.S.-based sources.

Exempted categories include: Inactive entities that were established on or before January 1, 2020, but are not in active business; nonprofits except ones that have their non-profit status pending with the IRS; and small businesses that are members of the National Small Business Association (NSBA) as of March 1, 2024, the date a federal court ruled in favor of NSBA’s constitutional challenge to CTA.

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