As a small business owner, it can be hard to keep up with the legal environment, legislations, and regulations enforced both on a national and local level. The attorneys at The Saade Law, P.A., have vast legal and practical business experience to help clients navigate the ever evolving legal and governmental landscape to ensure they are compliant and protected. In January of 2024, a new act went into effect that is poised to impact millions of businesses across the country. The Corporate Transparency Act (CTA) was enacted in 2021 and went into effect in January of the present year. Understanding the intricacies of this act and its potential impact on your businesses is more important than ever. In this article, the attorneys at The Saade Law Firm, P.A., will dive deep into this legislation: its meaning, implications, and how to comply.

Understanding the Corporate Transparency Act (CTA) and Beneficial Owner Information (BOI) Report

Under the Corporate Transparency Act, certain businesses that meet a set of criteria will be required to submit a Beneficial Ownership Information (BOI) Report to the United States Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), providing details that identify individuals who are associated with the company submitting the report. The purpose of this anti-money laundering legislation is to combat illicit activity including, but not limited to, money laundering, tax fraud, financial terrorism, and other financial crimes by capturing ownership information of businesses operating in or accessing markets in the United States. This will make it harder for bad actors to benefit or hide ill-gotten gains through shell companies or other opaque ownership structures. According to Congress, this is a widely-used tactic that affects national security and economic integrity, which is why the CTA was put into place.

Beneficial Owner of a Company (BOI)

Submitting a Beneficial Ownership Information (BOI) Report is a key aspect of this legislation, which raises the question of who should be considered the beneficial owner of a company. According to the CTA, the beneficial owner of a company is an individual that directly or indirectly has a significant ownership stake in said company. This can mean a person that has major influence on the company’s decisions or operations, owns a minimum of 25% of company shares, or has a similar level of control of the company’s equity.

Information Required in BOI Report 

All reporting companies must provide their legal name and trademarks, as well as their address, taxpayer identification number, and the jurisdiction in which they are registered. However, details in the report will change depending on the date the business was established. For companies established or registered after January 1, 2024 they must provide information related to the beneficial owners, the business itself, among other things, whereas businesses established before said date can omit information about company applicants. As of now, there is no annual reporting requirement, however, there are requirements to update the original filing when things change. 

Process for Reporting BOI

Starting on January 1, 2024, reporting companies will have a limited time frame to submit the information. The timeline for submission will vary depending on the date the business was established, as follows: 

1. Companies established before January 1, 2024: they will have one calendar year to file. The deadline is January 1, 2025.
2. Companies established between January 1, 2024 and January 1, 2025: 90 days to file from the notice of formation or publication announcement, whichever comes first.
3. Companies established on or after January 1, 2025: 30 days to file from notice of formation or public announcement. 

Who Can Access BOI

The FinCEN has published the rules that will govern access to and protection to BOI on December 22, 2023. Companies can rest assured that beneficial ownership information will be stored in a secure and private database using rigorous information security controls used by the federal government to protect sensitive information. Below please find a breakdown of which entities can access the information and for what purposes: 

• Federal, state, local, and tribal officials who submit a request through a US Federal government agency to obtain BOI for authorized activities related to national security, intelligence, and law enforcement. 
• Certain foreign officials who submit a request through a US Federal government agency to obtain BOI for authorized activities related to national security, intelligence, and law enforcement. 
• Financial institutions can have access to information in certain circumstances with consent of the reporting company. 
• Financial institution regulators will have access when they supervise the above mentioned financial institution.  

Electronic forms are available on FinCEN’s website and there is no cost associated with filing the report. Even though companies can file their own BOI forms, it is strongly advised to have the support of an experienced attorney throughout the process to ensure everything is done promptly and perfectly. Additionally, an attorney can help a company interpret facts to determine who is the beneficial owner of the company. The attorneys at The Saade Law Firm, P.A. are here to assist you with beneficial ownership in Florida and beyond, as well as with all legal  business needs for your organization to flourish. Contact us today to learn more.

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