According to Treasury Secretary Janet Yellen, halfway through 2024, just 2.7 million of the 32.6 million businesses estimated to be required to file BOI reports this year have done so. Further stating that many small businesses aren't even aware of the change. The update to reporting requirements took effect on January 1, 2024, and they may affect your company.
This reporting change is part of the Corporate Transparency Act (CTA). Enacted by Congress in 2021, the CTA is designed to deter illegal financial activities such as money laundering, drug trafficking, terrorism, and tax evasion.
Many companies will be required to file beneficial ownership information (BOI), which details who owns or controls the company, with the Financial Crimes Enforcement Network (FinCEN).
Learn more about the beneficial ownership information form and other BOI requirements here, and continue reading this article to stay informed about and compliant with the CTA.
Who is required to report, and who is exempt
Companies who are required to report to FinCEN are referred to as reporting companies. Reporting companies include:
- Corporations
- Limited Liability Companies (LLCs)
- Limited Partnerships
- Foreign companies registered to do business in any US state
- Any other business who filed documents to do business with the secretary of state or similar legal entity of any state or Indian tribe
Some companies who fit these criteria are exempt because they operate in a regulated industry. Publicly traded companies, non-profit organizations, and investment advisers for instance, already have ownership reporting requirements.
At the time of publication, there are 23 reporting company exemptions: