October 17, 2024 – Effective January 1, 2024, new reporting rules have gone into effect under the Corporate Transparency Act (CTA) requiring most companies created in or registered to do business in the U.S. to report information on their “beneficial owners” to the Financial Crimes Enforcement Network (FinCEN). The reports, referred to as Beneficial Ownership Information (BOI) reports, must be filed electronically through the FinCEN website. Failure to comply with BOI reporting requirements may result in civil or criminal penalties or both.

While HBE will not be preparing or assisting with the preparation of Beneficial Ownership Information (BOI) reporting forms, we are committed to keeping our clients informed about the regulations.

If you determine that your business is obligated to comply with BOI requirements, we encourage you to contact your attorney or legal counsel to seek additional guidance and ensure compliance. Taking proactive steps in assessing and fulfilling your BOI obligations can help safeguard your business and mitigate potential risks.

What is a Beneficial Owner?

A beneficial owner is defined as someone who owns or controls at least 25% of its ownership interests, or who, directly or indirectly, exercises substantial control over a reporting company. An individual has substantial control of a reporting company if he or she:

• Is a senior officer of the company,
• Has authority over the senior officers or a majority of the board of a company,
• Has substantial influence over the company’s important decisions, and
• Has any other type of substantial control over the company. 

This generally includes individuals who are directly related to ownership interests in the company, but indirect control may also result in classification as a beneficial owner.

Reporting Requirements

The CTA rules generally apply to both domestic and foreign privately held reporting companies, and includes any corporation, limited liability company or other legal entity created through documents filed with the appropriate state authorities. Certain entities are excluded from reporting requirements, including entities who already reporting their information elsewhere.

For companies created or registered prior to January 1, 2024, reporting is required by January 1, 2025. For companies created or registered on or after January 1, 2024, and before January 1, 2025, reporting is required within 90 calendar days of the earlier of receiving actual or public notice that the company’s creation/registration is effective. Updates to such reporting will also be required. Beginning in 2025, any new or updated reports need to be filed within 30 days of the creation of the entity or the change required to be reported.

BOI reporting must be completed electronically through the FinCEN website.

Next Steps

What should your company do now to ensure compliance? Evaluate your current situation. If you determine that your business must meet these obligations, collect the required information, update and refine internal policies for accurately reporting the data, and establish a system for monitoring the reporting processes.

For additional BOI resources, visit our dedicated webpage.