Real Estate Investors Association of Greater Cincinnati

Small Businesses now required to report ownership to FinCEN



If you are an owner or officer of any closely-held corporation or limited liability company (or any other business entity or serve as a fiduciary of any entity) – or intend to be, you need to carefully read about these new federal regulations that mandate disclosure of the ultimate beneficial ownership of that entity – the consequence being as much as a $500 per day fine for non-compliance.

For small business owners:

  • We strongly recommend attention to this matter and compliance.
  • If you have a long-dormant LLC or corporation, now may be a time to consider dissolving the same to avoid filing requirements under this regulation.

On January 1, 2024, the Corporate Transparency Act (“CTA”) took effect, requiring non-exempt entities (both foreign and domestic) that are registered to conduct business in the United States to submit certain information regarding their “beneficial ownership” to a confidential database housed within the Financial Crimes Enforcement Network (“FinCEN”).  Unless exempt, the CTA affects:

  • Corporations, LLCs, and other similar entities created by the filing of a document with the Secretary of State, whether formed prior to or after the effective date of January 1, 2024; and
  • Corporations, LLCs, and other entities formed under the laws of a foreign country but registered to do business in any U.S. State, whether formed prior to or after the effective date of January 1, 2024.

These non-exempt entities are referenced in the CTA as “Reporting Company(ies).” The Reporting Companies required to submit information under the CTA are not just limited to corporations and LLCs, but also include limited liability partnerships, limited partnerships, and business trusts.

How do I know if my entity is exempt?

FinCEN recognizes 23 exemptions to the CTA’s BOI reporting requirement.

Please note that these exemptions contain many nuances. If you are unsure whether your entity may qualify for an exemption, we are happy to help you in your evaluation. Additionally, FinCEN’s Compliance Guide (linked below) contains a wealth of information to consider when making this determination.

We anticipate the most common exemption for our clients will be No. 21 (large operating company).  Large operating companies are those that (a) employ more than 20 full-time employees (30+ hours per week) within the United States, (b) maintain a physical location with an operating presence within the United States, and (c) can demonstrate over $5 million in gross sales or receipts via federal tax return or other applicable IRS form.

What information am I required to disclose?

Reporting Companies are required to complete and submit a form detailing their “beneficial ownership information” or “BOI.” A beneficial owner is any individual who, directly or indirectly, (a) exercises substantial control over the Reporting Company, or (b) owns or controls at least 25% of the ownership interests of the Reporting Company (“Beneficial Owner”). In other words, FinCEN wants to know who owns and controls entities operating within the United States at an individual level.

  • Examples of a beneficial owner who exercises substantial control of a Reporting Company include, without limitation:
  • Officers and directors (or those who exercise the authority of an officer or director), g., CEO, CFO, COO, President, Treasurer, etc.;
  • Individuals with the authority to appoint or remove officers or the board of directors;
  • Individuals with ownership or control of a majority of the voting power or voting rights of the Reporting Company;
  • Individuals with rights relative to the Reporting Company associated with any financing arrangement or interest in a company;
  • Individuals who exercise control over one or more intermediary entities that separately or collectively exercise substantial control over a Reporting Company; and
  • Individuals who direct, determine, or have substantial influence over important decisions made by the Reporting Company.
  • Examples of an ownership interest include, without limitation:
  • Individuals with an interest in the Reporting Company by virtue of 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;
  • Individuals with any capital or profit interest in an entity; and
  • Individuals who have an “option” relative to any of the foregoing.

Minors, individuals acting solely as employees, and those whose only interest in the Reporting Company is via a future right of inheritance are NOT considered beneficial owners.

In determining the percentage of ownership interest in corporations, entities taxed as corporations, and other entities that issue shares of stock, an individual’s percentage of ownership interest is the greater of (a) the total combined voting power of all classes of ownership interests of the individual relative to the total outstanding voting power of all classes of ownership interests entitled to vote, or (b) the total combined value of the ownership interests of the individual relative to the total outstanding value of ownership interests.

For entities that issue capital and profit interests (including entities treated as partnerships for tax purposes—e.g., many one or two-member LLCs), the individual’s total capital and profit interests are compared to the total outstanding capital and profit interests of the Reporting Company.

The person(s) who prepares and/or files the BOI Report is referred to as the “Company Applicant.” This can be an owner or representative of the Reporting Company, such as an attorney. Each Reporting Company will need to provide the name, residential street address, and a copy of a photo ID for each of its Company Applicants AND each of its beneficial owners.

A copy of the BOI Report template can be found here:

What is the deadline for submitting the BOI Report?

In short, the deadline for Reporting Companies to submit their BOI Reports differs depending on when the Reporting Company was formed.

  • Reporting Companies formed prior to January 1, 2024 must submit their BOI Reports by January 1, 2025. However, we recommend getting these reports submitted sooner rather than later in case the FinCEN database experiences any technical issues due to increased traffic toward the end of 2024.
  • Reporting Companies formed on or after January 1, 2024 but prior to January 1, 2025 are required to submit their BOI Reports within 90 days of formation (the date on which they receive confirmation from the Secretary of State in most instances).
  • Reporting Companies formed on or after January 1, 2025 are required to submit their BOI Report within 30 days of formation.
  • Any update or change to a Reporting Company’s BOI must be submitted within 30 days of when the change occurs.

What happens if my Reporting Company does not submit its BOI Report within the required timeframe?

FinCEN has provided that:
The willful failure to report complete or updated beneficial ownership information to FinCEN, or the willful provision of or attempt to provide false or fraudulent beneficial ownership information may result in a civil or criminal penalties, including civil penalties of up to $500 for each day that the violation continues, or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000. Senior officers of an entity that fails to file a required BOI report may be held [personally] accountable for that failure.

Furthermore, any individual who refuses to provide information required to be included in the BOI Report, or who provides false information, may also be subject to civil and/or criminal penalties.

Next Steps
If your entity is a Reporting Company created prior to January 1, 2024, you have time. However, you should be compiling the necessary documents and information required to complete the BOI Report. Finney law Firm is offering BOI Consultations, during which time we will (a) help you determine whether your entity is a Reporting Company or whether an exemption applies, (b) hep you identify your company’s beneficial owner(s), and (c) submit your Reporting Company’s BOI Report to FinCEN as a Co-Company Applicant.

If your entity was formed on or after January 1, 2024, your deadline may be quickly approaching, and it is extremely important that you file the BOI Report and/or contact us right away.

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