Business Owners: It's Time to Confirm Who Owns Your Company

To help fight illegal finance, the Corporate Transparency Act (CTA) went into effect on January 1, 2024, requiring U.S. companies to report who runs them. Millions of small businesses need to comply with the act. Here’s what to know.

What Is the Corporate Transparency Act?

The Financial Crimes Enforcement Network (FinCEN) enacted the Corporate Transparency Act in 2021. Under it, many businesses have to submit a Beneficial Ownership Information (BOI) Report to identify the people associated with them. The act is designed to prevent financing for terrorism, tax fraud and money laundering.

Which Businesses Need to File?

Most corporations, limited liability companies (LLCs) and other types of businesses created by filing a document with a secretary of state need to file, whether they are based in the U.S. or another country.

FinCEN shares a list of 23 types of companies that may be exempt in section C.2 of its Beneficial Ownership Information Reporting Frequently Asked Questions document. Exempt entities include:

• Many nonprofits
• Certain insurance and accounting firms
• U.S.-based large operating companies meeting specified requirements
• Subsidiaries of certain exempt entities

Filing is free, and you don’t need to use a lawyer or accountant, though you can consult with professionals for advice if you like. 

Don’t overlook filing, since penalties for willfully violating the reporting requirements are steep. Civil penalties can be $500 per day, and criminal penalties may be up to two years in prison and a fine of up to $10,000.

Who and What Needs to Be Reported?

People who have a significant ownership in the company, whether direct or indirect, are considered beneficial owners. That may include people who:

• Have a major influence on operations or decisions
• Own at least 25% of the company
• Have other comparable levels of control

For the business, you need to report:

• Legal name
• Trademark
• U.S. address
• Taxpayer ID number
• The jurisdiction where your company was formed or registered 
• The people who created the business, for companies formed after January 1, 2024

For each beneficial owner, you need to report:

• Name
• Address
• Date of Birth
• Identification, such as a driver’s license or passport

You’ll need to update your company’s report if there are any changes in ownership or to the name, address or identifying information of any beneficial owners. That’s an important requirement to be aware of — otherwise, you might not think about updating this information if you get married and change your name, move or get a new passport.

Keep These Deadlines in Mind

Based on when your company was formed, you’ll need to meet the FinCEN requirements of 2024 by these dates:

• Companies that were created or registered before January 1, 2024, have until January 1, 2025, to file their reports.
• Companies created or registered in 2024 have 90 calendar days to file their reports. The 90 days begin on the day that they receive either actual or public notice that creating or registering the company was effective. 

You can find out more about reporting requirements in the Small Entity Compliance Guide.

Does Your Business Need Insurance?

As you’re reviewing and reporting ownership for your company, it’s a good idea to look at the services and coverage your business might need. Farm Bureau offers a range of business insurance products that cover commercial, home-based and ag-based businesses and more. A Farm Bureau agent can review your coverage and make sure you have everything you need. Reach out for a consultation.